Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here’s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

A matter of interest

By Graham Young - posted Tuesday, 13 November 2012


Could there be a relationship between the Reserve Bank decision to maintain interest rates this month and the steady rise in the polls of the Gillard government?

There could, and the link would be the housing market, which our research suggests is about to get an infusion of confidence. A more buoyant market helps the government, but makes the RBA wary of reinflating the housing bubble.

We asked an online virtual focus group of 744 Australians, balanced by voting intention, whether it was a good time to buy real estate: 52 per cent agreed and only 19 per cent disagreed.

Advertisement

Liberal and Labor supporters had similar confidence levels while Greens were more hesitant. The significant factor was that homeowners were more confident than renters, and Greens are 50 per cent more likely to rent.

In fact, 56 per cent of homeowners thought it was a good time to buy while only 34 per cent of renters agreed. This will put a cap on how buoyant the market might be, as the trade-up market needs renters buying lower-priced properties, supporting the base of the pyramid.

Confidence is primarily driven by speculative factors. Those who strongly agreed it was time to buy cited price falls as the biggest factor, the prevailing sentiment being what has come down will go up.

Closely allied was the idea that interest rates are low and make purchasing attractive. So a decision by the RBA to drop rates would only increase speculation.

We didn't detect job insecurity as a strong influence on sentiment. Rather it was the state of the world economy that was most likely to be mentioned, followed by the prospect that prices might fall further.

We did our research after seeing RP Data figures on auction clearances, which showed that from early 2009, the year of the "cash splash", there was a rise in clearances until September 2009. There was then a steep decline that levelled off only in July this year. It has now been in recovery for three months, along with Julia Gillard's vote and popularity. There has also been an increase in properties going to auction.

Advertisement

This suggests that sellers have adjusted their expectations. At the same time, buyers are comfortable enough with their situation to make a long-term investment commitment. That being the case, voters may also be prepared to rule a line under past disappointment in the government and to invest in its future promise.

On the opposition side, Tony Abbott's campaign on the ETS is primarily about cost of living. While that's an issue, if asset prices start to move, again, cost-of-living rises may be deferred and capitalised back into housing, making them seem less pressing, weakening the opposition's proposition.

There is also data to suggest that buying a residential property may make sense not just on the basis of anticipated capital gains, but also on cash flow. Another RP Data study finds 388 suburbs where it is cheaper to own than rent. That may shift more of our renters into the "good time to buy" category: another plus for the real estate industry and the government, but putting a further brake on interest rates and Abbott.

  1. Pages:
  2. Page 1
  3. All

This article was first published in The Australian.



Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

5 posts so far.

Share this:
bookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed Newsvinereddit this reddit thisStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Graham Young is chief editor and the publisher of On Line Opinion. He is a writer, and a former vice-president and campaign chairman of the Queensland Liberal Party.

Other articles by this Author

All articles by Graham Young

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Graham Young
Article Tools
Comment 5 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy