Month-In-Review-March-2015

Month in Review
March 2015
that freshness to the market that attracts purchasers
like teenage girls to a One Direction concert.
The recent drop brings interest rates to all-time
historic low levels and prior to this drop they have
remained extremely stable for a considerable period
of time. It may stimulate some activity in the sluggish
Hunter Valley areas although it is hard to see this
becoming a trend without the required improvement
in general macro-economic factors. Given that the
Reserve Bank usually only decreases interest rates
in a sluggish and under performing economy, it is
unlikely to lead to increased speculation from any
but the most audacious (we could have used many
descriptive words here, this was deemed by general
consensus as the most positive and generous)
investors. The usual caveats here apply with the
improvements in resource prices, the Australia dollar
and the employment outlook all potentially helping
the Hunter Valley to rebound.
and are finding what they are looking for at much
lower prices than are on offer in and around Sydney.
The danger is when the market turn sour, the first
property that goes is the holiday home and as such
Hawks Nest and Nelson Bay properties are subject
to a shorter, sharper boom-bust cycle. This should
always be considered when investing in spots that
are reliant on tourist income and visitors to the area.
The danger with interest rates being as low as they
are at present is that they inevitably increase. How
will purchasers (especially novice purchasers with
limited experience of fluctuating rates) cope with the
rising interest payment burden? If enough invest at
current levels and don’t factor in potential increases,
then a world of hurt could be coming to the market
in the shape of debt defaults and mortgagee in
possession sales. As always, it will take a while for
this to play through the market.
Low interest rates are likely to help the holiday
focused areas of Nelson Bay et al, Hawks Nest
and Tea Gardens. Both these locations (only a few
kilometres apart as the crow flies, much further
by car) have been steadily picking up steam over
the past 12 months or so. This appears to be on the
back of the holiday buyer becoming more prevalent
and competing with locals for stock. Noticeably
Sydney buyers are looking for beachside holiday
spots within a two to three hour drive from Sydney
Residential
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