Five minutes with Matusik

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Friday, 23 July 2010

Renowned property analyst Michael Matusik sits down

in the hot seat for the exclusive Q&A with MPP.

Independent market analyst Michael Matusik is one of the country’s leading commentators on real estate markets and trends. Michael is currently on the Sunshine Coast, courtesy of MPP, and was the keynote speaker at a special industry-only celebratory breakfast to mark MPP’s 100th issue. In the prelude to the highly anticipated event, we sat down with Michael to get an overview of the local Sunshine Coast property market, and according to this expert, the facts are hard and fast.

In your opinion, what is the state of the current property market on the Sunshine Coast?
“The Sunshine Coast residential market, while doing it tough, is better than many think. There was some price growth last year, up seven per cent on average, when based on individual unimproved resales. Sales turnover, however, is down six per cent on 2008/09 to 9000 sales during the 2009/10 financial year. However, sales are down 40 per cent from the 2007 market peak. Rents rose a bit last year and were up about four per cent, which really is reflecting inflation. In short, I consider it a buyers’ market. In a more frugal world, consumers now need to save rather than spend, which is the opposite trend that occurred during the noughties. Overall, the Sunshine Coast property market is likely to plateau at current sales levels, price and rent for some time to come. If interest rates rise faster or sooner than the market can bear, end prices might even fall a bit.”

What do you think the next 18 months hold for the local property market?

"I really think until the federal election is over and the economic quagmire in Europe and the US is sorted out, the residential market is likely to remain lacklustre at best."

Are the current market conditions okay to buy and sell in?
“Ironically, the current market conditions are good news for the housing industry. Yes, it is more a buyers’ market, but it allows for sellers to buy and sell in similar market conditions. Taking time to consider what to buy and if, and then how best to sell, often results in better decisions and wiser investments. Many agents and developers prefer a selling market, but or buyers, the current market conditions are an improvement over recent years.”

Will there be rising rents on the Sunshine Coast in the next 12 to 18 months?
“Rents are not rising much, nor are they likely to do so over the next 12 to 18 months. A tight vacancy rate and strong full-time job creation is what causes rents to rise, and not higher landlord costs. Often landlords need to bear the cost impost, until rental supply gets tight. The vacancy rate on the Sunshine Coast and across many parts of Queensland is in excess of four per cent and unfortunately job creation, while getting better (there were 14,000 new jobs created on the Sunshine Coast, most part-time over the past 12 months), is not yet strong enough to create stronger rental demand.”

If you had $500,000 to invest towards property on the Sunshine Coast, what would you buy and where?
“One of the real opportunities to emerge out of the current market slowdown is fractional ownership. This is where several owners, between four and 15, but often eight, own a piece of a holiday home rather than all of it. Given the average use of a holiday residence is just over three weeks per year, this ownership pattern makes a lot of sense. This ownership style is popular in both the United States and in several parts of Europe, and many Australians already own holiday (and even more traditional residential investment) homes in some form of co-ownership, whether it be with relatives, mates or even unrelated parties. This trend is likely to gain momentum across Australia and especially in discretionary spend markets like the Sunshine Coast. One project, in Noosa, is currently offering a fractional or co-ownership scheme, with another (again in Noosa) set to be released in early September. So if I was to invest $500,000 on the Sunshine Coast, I would give serious consideration to a fractional share in a blue-chip holiday property in a prime waterfront position.”

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