What’s Up With The Best City In The World
What's Up With The Best City In The World
According to the experts, the Melbourne property market has peaked, and the outlook for 2018 is a gradual decline in property values.
According to the experts, the Melbourne property market has peaked, and the outlook for 2018 is a gradual decline in property values. After an unprecedented period of strong growth, not experienced since the Gold Rush, the property boom has come to an end. True, but what interests me is why?
Most experts attribute the softer housing conditions to lack of affordability, and that this correction is part of a normal cycle. I don’t disagree with these remarks but affordability? Perhaps sentiment is a better fit given Melbourne is the most liveable city in the world.
I could understand if this correction was driven by factors such as higher interest rates, a credit squeeze or god forbid, global warfare but affordability? C’mon. I am sure all property owners would be delighted with this soft correction, it is the soft landing to die for. Here is the good news, this correction will create a strong platform for future growth!
My greatest concern is the re-introduction of stamp duty for investors buying off the plan. It is all very well to increase stamp duty for the purchase of investments as a means of reining in demand but to reintroduce stamp duty for off the plan investment is an unmitigated disaster, and will have far reaching consequences for many years to come. Let’s face it, if the logic behind removing stamp duty is to encourage spending, then hello, you don’t have to be Einstein to work out what the opposite will do.
What is the Government thinking? A grab for cash surely not? and What sort of message is Victoria sending? We don’t want investment? Of course we want investment, it just needs to be measured, and controlled. Already, these changes are having an effect on foreign investment. The saddest part is the impact this decision will have on the entire industry, particularly employment. Not only is property investment falling, developers are pulling out in droves as a result of not being able to secure the necessary funding because of insufficient pre-sales. Removing the supply will result in higher prices and lead to an increase in rental costs.
On a positive note, with Melbourne’s population booming, my take is that property values will remain strong. So, rather than see housing affordability as a negative, If you want to live in the best cities in the world such as Auckland, Vancouver or Melbourne to name a few, then it should not come as any surprise that you have to pay a bit more for the privilege.