NSW Property Outlook 2018
On Friday I went along to the Property Council discussion on the outlook for our sector this year.
Overwhelmingly positive in their responses, the panel commented on the strength of economies at both a local and global level.
Despite the negative news we read on global issues; for the first time in a long time, all major global economies are growing and strong.
The biggest local risks to economic growth
- The disparity between wage growth and increased housing cost.
- Household debt. Australia maintains high debt ratios and any event that causes interest rates to rise is a risk.
- Increases in energy costs (30% over the past years)
These are the same stories we have been hearing for a very long time; complex by nature, what policies could Government seek to introduce to reduce these vulnerabilities??
Will we start seeing “buy-to-rent” schemes in Australia based on the US and UK models?
In light of tax cuts overseas, it was highlighted that we need to maintain our global capital. If the Government does not take the lead and reduce business tax, we will not be attractive for overseas investment.
Australia is already an expensive place to live and do business – also we are logistically challenged in terms of distance and speed of internet!
Not reducing tax could be the death-toll on overseas investment, but at what cost to the budget?
Growth Asset Class?
The best-looking asset class this year is industrial and logistics with the arrival of Amazon.
Australia is very behind in terms of online shopping and has generally very poor performance in terms of service delivery. Amazons’ arrival in the market is going to drive businesses to up their game.
Traditional retailers will be expanding their service outside of “bricks and mortar” stores and e-commerce retailers improving their efficiency and performance.
The panel were all very happy about the current state of the property industry and the economy as a whole.
They all agreed that the biggest risks are from an overseas event rather than a local one.