From the desk of CEO Milton Rendell
As mentioned in my last communication, 2016 was looking to be being a cautious one and the first couple of months have certainly reflected that. Sales activity has been a little slower out of the blocks in the New Year in comparison to past years. Buyers appear to be shopping for longer spoilt by choice as a by-product of the number properties of available. Owners meeting the market in terms of pricing are achieving results. Buyers are looking for what they perceive as value, so pricing has become one of the main issues but naturally presentation and location are still very much part of the elements that help complete a sale.
Our finance arm in Plus Loans has started the year well with many of our clients looking to consolidate their positions through re-financing old loans and taking advantage of the products that are available out there through the various banks. Inquiry for loans for people potentially buying property has been consistent but we have seen an increase in the number of people looking to consolidate. Interest rates are still at a very attractive rate and I think we will see a return in the investor market later in the year after the government finalises their talk on what they will do with negative gearing.
In the eighties the then Federal Labor Government played with negative gearing and it back fired. Rents went up and the government was in a position where it had to provide more homes through its own investment, and had to subsidise more rent as rents went up, so this was costly to the government. There is no doubt there will be a restructure of negative gearing in some fashion but I can’t see it personally being removed as the government still requires the support of private investors in the market as well encouraging people to invest in their long term future to take pressure off pension payments.
In the next twelve months we will see state and federal elections so the promises will start to roll soon as they normally do. Businesses will start to analyse what is presented and hopefully will start to present more positiveness into our economies. I am not sure here in Western Australia we could have had forecast the unsettled times we have had, but I personally think we are near the bottom of it so I will be looking up for the remainder of this year and next. I understand there is still plenty to be done now to work through this current economic climate.