2012 The Big Picture
From a scan of headlines and news opinions, it appears that for property, 2011 proved to be a fairly stable, if subdued year. And for the apartment market I would agree, with no real shocks along the way. That is of course apart from holding our breath waiting for interest rates to start to be cut.
2012 looks ready to put a few more hurdles in place for the apartment market which is increasingly a complex marketing challenge. And this complexity means there is a need to have a very broad view of the wider economy. So at the start of the year, and while still somewhat in holiday mode, what are some of the key sign posts?
The merry-go-round that is now the Euro Zone is understandably making everyone nervous. I am not going to repeat the figures involved, but some of them are simply stunning almost impossible to digest. For the Australian apartment market, the real impact ties into our banks being very unhappy about Europe and the possible negative impact on consumer confidence.
One big issue, as the banks keep telling us, will be the cost of money. If as a direct result most of the local banks disconnect from the Reserve Bank in how they manage interest rates. Such a disconnect has already been signaled and is a reality with the ANZ and so may well spread. Such a move may make developers, both big and small, and home loan customers a little anxious.
The strength and health of confidence in 2012, will be as big an issue for our market, as the Euro Zone is for the banks and just as difficult to manage. Confidence levels impact in many ways, because it’s a mix of big and small issues. Potential apartment buyers, of all kinds will also become increasingly sensitive to price rises for everyday essentials, like water and electricity. Utilities have arguably been badly managed in Australia, and now as they pass on cost increases, these extra costs while not up there with home loan repayments are helping to dampen confidence.
How various government incentives, such as stamp duty changes, building incentives and other grants are changed will also be an important part of the mix for 2012. The relationship between some of these varied charges, like stamp duty and the GST resurfaced briefly in 2011, but may again boil to the surface in 2012.
The shortage of supply in the housing market will continue to be an issue, and one of particular importance to NSW. Some figures from the National Housing Supply Council currently suggest a national shortage of 215,000 and 73,700 in NSW alone. Readdressing this supply problem will require considerable investment and create huge demand on labour and resources. Any sort of medium-term solution let alone long-term fix, looks nowhere in sight as we move into 2012.
Returning briefly to the banks, there has been a suggestion that the highly cashed-up Japanese banks, may be looking at the Australian home loan market, so could this be the new ‘aussie home loan’ funded from Japan and managed on-line without a single branch and offering very competitive rates.
The share market turbulence has no reason to stop, mainly thanks to the Euro Zone (again) but will this see a push from small and large investors towards residential property? This could potentially see some movement away from the popularity of fixed term and cash deposits. Which as rates start to fall will be looking less attractive.
For those of us directly engaged in project marketing, will 2012 be the year that Social Media starts to take over from the old media in a fully- fledged way? With a recent prediction from the US that partly as a result of the increasing use of Tablets, many hard-copy newspapers will start to disappear in as few as 5-6 years. While at the same time the marketing acceptance of Social Media grows daily…much more to come on this – a good topic to watch and debate.