As always, buyers continue to be influenced by the combination of local area market conditions overlaid by the general economic environment. During the week, the recent boost to consumer confidence created by falling interest rates was dampened by a renewed fear of a second full-blown global financial crisis, with speculation rife over the Greek general election ballots on Sunday.
An AP article said bankers, governments and investors were preparing for Greece to stop using the Euro, with the outcome dependent on which party wins Sunday’s election. In the lead up to the ballots, savers across Europe were making a run on the banks, withdrawing their savings either in fear their money will be devalued or that the banks are on the verge of collapse. Particularly in Spain and Greece, billions of Euros are being taken out of bank accounts, magnifying the financial stress those countries are already under. The article terms the trend a “jog” rather than a “full-bore run”, but suggests that if the mass withdrawals do turn into a flood, it could hasten financial turmoil in Europe which would then potentially spread around the world.
Domestically, AAP reported interest rate cuts and Government handouts are set to boost retail spending at the fastest rate since the GFC. Deloitte Access Economics is forecasting retail sales will grow by three percent in 2012/2013, up from .7% in 2010/2011. Conversely, the Daily Telegraph said the mid-year sales are a fizzer as interest rate cuts have failed to ignite spending. Retailers say they are facing the worst environment in more than 30 years, with many reporting lower sales than this time last year.
Meanwhile in the property market, Westpac boss Gail Kelly told the economic forum in Brisbane last week that Australia is unlikely to ever again see the housing boom that sparked a massive rise in personal wealth over the last decade. Kelly told business leaders that the years of compound growth in property prices are over for good.
In terms of auction clearance rates, the latest finalised results from researcher RP Data show under the hammer sales fell in every capital city except Brisbane, where the clearance rose to 34.9%. Sydney recorded a clearance of 49.8%, Melbourne 38.6%, and Adelaide 26%. Volumes in other capital cities were too low to yield meaningful averages.
With the future as unclear as ever, we encourage you to view all buyer activity around your property in light of the current environment.