"I wonder whether you could make a comment about the prices vs affordability vs employment in that area ? My understanding is that the GC area is far more services oriented and therefore very sensitive to tourism. It's probably unique in the Australian property market in that way I suspect ."
Tourism is vital. There has been a lot of infrastructure built, nearing completion, or locked in for near future. Its very exposed to the Australian dollar. A low dollar is pivotal, if I knew it was going to crash I would be straight back into property, the low dollar attracts the overseas tourists, and keeps the domestic tourists at home too. I speak to a lot in the industry, they all are reporting higher occupancy rates and many attributed the lowering of the dollar as the driver. The flow on through the economy is profound, but the place was dead when its high.
I just completed an environmental scan which is why I was confident on the call that end of 2012 was the bottom of the market locally. Its exactly when our local unemployment rate ducked back under the statewide rate and that trend has been maintained. Its also when I started to see the numbers at open homes increase on the ground, and three months ago was when agents first started reporting multiple offers on houses within a month of listing. And as always, they only need a sniff here before its boom time, we blinked and missed it and are waiting out for the next cycle, which is inevitable here at least.
Vacancy rates seem low, agents reporting around 1% which is very tight, some even advised leaving your name with tenancy managers because not all properties made it online before they were let again. Very good for investors but don't know how many tenants default.
I have never invested in units but see more value in them at the moment with returns on low entry prices and potential future redevelopment in the small walkup styles. Downside is there are so many upmarket complexes and highrises that the rents need to be very competitive or very well located. We all know how much people lost buying off the plan apartments here, its like the GC is the spiritual home for taking massive losses on units. Another big risk is that I want to know what happens with the Commonwealth Games athletes village, are we going to have a lot of studio accommodation suddenly flood the market in 2018 and what will that do to vacancy rates?
Toss a coin, there is a lot of potential upside but also some storm clouds to temper the enthusiasm. If our dollar goes up jobs will go again, if it collapses I will be looking very closely at options to get back in. I want to see what happens over the next 12 months before I look to get back in but if I do it will be for investment not PPOR most likely.
