BY GARETH KENT<\/p>\n
Director,<\/p>\n
Preston Rowe Patterson<\/p>\n
This year has been harder on people than the previous COVID years combined.<\/p>\n
I think everyone has found it hard to transition from a COVID crisis into COVID normal. None of it still makes sense.<\/p>\n
There have been more fatalities in the current COVID normal phase than in the COVID crisis phase; there have certainly been more divorces (up 13.6 per cent on the previous year!).<\/p>\n
It is like we all drank the red cordial, and now that the sugar hit has worn off.<\/p>\n
That is also an apt description of the property market this year. The transition out of the property boom into the current cycle has been much faster than anyone predicted.<\/p>\n
The fall in regional dwelling values is catching up with the capital cities, but it’s mild, more like a controlled descent. This has been brought on by the RBA’s engineered response to the increase in inflation.<\/p>\n
Now we are in an adjustment phase, and overall property values have come off their peak by an average of 6 per cent.<\/p>\n
But that is hardly a concern when we have had peaks of > 20 per cent annually over 2019-2021.<\/p>\n
Also, the record low unemployment levels are a problem (who would have thought!) that will not be fixed overnight.<\/p>\n
So, give some thought to those young waiters at your table this year; they are probably straight out of school and thrown into the deep end.<\/p>\n
Employers have no other option, school leavers will be a big boost to economic activity this summer, more than ever before, as shops and restaurants will be able to stay open.<\/p>\n
Interestingly our workforce is recovering better than America, which is due to the increase in female participation.<\/p>\n
The low unemployment ensures that we are unlikely to enter a recession, unlike America, and we are also unlikely to have a housing market crash.<\/p>\n
We are adjusting to a new economic and property normal.<\/p>\n
Factors such as an average variable rate of 4.5 per cent, higher Interest Coverage Rates (ICR), and more lending criteria is ensuring we are switching from a cashed-up market to a market with far less cash, and this is exactly what the RBA wanted.<\/p>\n
So how did you go this year? Residential property markets rose on average 23.7 per cent through 2021 yet fell by a national average of only -1 per cent in 2022.<\/p>\n
The preliminary estimate of the total value of residential dwellings in Australia in the September quarter 2022 was $9,674.4 billion, down $358.9 billion. However, our region fared a lot better than the rest of the country; the median house price in the City of Greater Geelong for the September quarter was $795,000, up 8.9 per cent on the previous year.<\/p>\n
The median house price in Surf Coast is $1.4m, up 23.5 per cent in the past 12 months.<\/p>\n
Portarlington’s median house price is $957,000, up 20.3 per cent. Ocean Grove $1.2m up 29.07 per cent, Lara $710, 000 up 11.81 per cent, Bannockburn $745, 000 up 13.2 per cent.<\/p>\n
You will be hard-pressed to find a suburb that had negative growth in our region. We have been insulated by lifestyle and affordability.<\/p>\n
In my last couple of articles, I mentioned that we might just be seeing the Green Shoots of a stabilized market appearing, but much of this will depend on the cash rate in 2023.<\/p>\n
CBA predicts a peak cash rate of 3.10 per cent, NAB believes it will be 3.60 per cent, and Westpac and ANZ agree it will peak at 3.85 per cent.<\/p>\n
It is currently sitting at 3.10 per cent, so if we are not at the top of the rate cycle, we are very near it.<\/p>\n
Let’s talk about some positive things on the horizon next year, listed in order of priority:<\/p>\n
1. Cats to win back-to-back flags<\/p>\n
2. Land 400 project winner announced<\/p>\n
3. Central Geelong framework plan signed off<\/p>\n
4. Commonwealth Games infrastructure funding announcements<\/p>\n
5. The Airshow is back on!<\/p>\n
Each will impact the focus on Geelong, its demand, and its liveability. When the Cats win, so does the town. It’s a fact that they bring us luck! The Land 400 project would bring thousands of new jobs to the region.<\/p>\n
The Central Geelong Framework Plan will get the developers pumping, and the Commonwealth Game’s impact on Geelong house prices could be epic.<\/p>\n
Conditions are looking positive for our region. So, this New Year’s Eve, kiss 2022 good-bye and let’s get some rest, recover, and recharge.<\/p>\n
People, we are on in 2023, and we are going to be the region to watch!<\/p>\n
Lastly, I would like to thank you for reading my articles this year, I have really enjoyed it. I want to thank John Fitzgerald, Warick Brown, Paula Allan, and everyone at the Times News Group for supporting me in this little idea, and I look forward to working with you all next year.<\/p>\n