housing survey, page-58

Hi Mr Steve,

rather a bold prediction - depends on a number of factors, some sectors of the market may take a nose dive of varying proportions

- outer metropolitan suburban areas with a high proportion of highly geared owners comes to mind.(sic 1989)

- regions that suffer a general economic decline, or some event that has an effect on household income.

- declining migration and to a lesser extent declining birth rates

- rising unemployment

We are on the Hume Freeway corridor in north east Vic. We have had a few significant economic and natural events in recent times - demise of the tobacco industry - around $35m farm gate plus multiplier effect, drought, bush fires affecting wine grape production and forest industries, bummer of a ski season in 2006.

The frenetic days of real estate in our region during the period 2003 - 2005 are over for the time being. Gains during that period were generally 120 - 150%.

Dwelling prices have come back 5% - 10%. Demand is generally quite good.


Residential rent yields are 5% - 6% gross (Eat your heart out Perth !) Demand for rental property has softened in past 4 months - the vacancy rate had been less than 1%, now around 1 - 2%

High value lifestyle rural properties - with a stand out point of difference are well sought after as are higher rainfall districts and access to water rights.

Rural land prices are not affected at this stage - although another year or two of drought could be a worry for the cropping guys to the west.

Overall business as usual - difficult to get a tradey, supply and demand for residential land is generally matched in larger centres.

I attended an NAB outlook conference last year - general consensus was that the Hume Freeway corridor between Melbourne and Sydney is solid across all market segments.

Cheers

OA