Two years ago the media here in Brisbane hardly carried a story on property forward of Shipping News. Now The Courier Mail has almost daily colour liftouts. In the suburbs Brisbane City Council is considering tightening noise abatement regulations as the sound of power tools smashes through the weekend peace.
What has happened to the X-Generation café society, the Rayban-wearing, black on black, latté-drinking layabouts of the 90’s? They’re all up at Mitre 10 buying power tools and talking paint colours or scanning the auction columns for the ultimate bargain.
What are the causes of this quantum shift in our approach and interest in property? Why is it now the “in thing”, the ultimate fashion accessory, the BBQ stopper, the only thing to talk about over dinner, down at the pub or over a short black in Park Road or James Street?
Quite simply it has been brought about by a rare combination of factors which have collided and compounded at a certain point in our history to create the hottest property market I have personally experienced in 30 years in the industry.
First, we should define what we mean by a property boom. My personal definition of a boom is when demand exceeds supply and prices are rising at a significantly higher rate than the balance of the economy.
Clearly the figures support the contention that we are in the midst of a property boom. So let’s ask, as Professor Julius Sumner Miller used to,”why is it so?”
In my view there are a number of significant elements which have simultaneously compounded to create this situation. Interestingly, although there are significant economic fundamentals, in my opinion the emergence of a number of non-economic factors could well be even more important.
While I will confine most of my comments and analysis to the south-east Queensland (SEQ) residential market, I should add that my comments are mainly general and that there are always exceptions in a market as diverse as the property market.
First, the economic factors.
During the '90s both Sydney and Melbourne experienced significant growth in demand and pricing. In fact, based on my definition, Sydney has been in boom conditions for the better part of the past 10 years.
On the other hand, following the boom of 1988-1991 and, given the fragmented nature of the development sector and the relative lack of sophistication in the building industry, the South East Queensland property industry simply failed to recognise that the boom was over and underwent a long period of overbuilding of residential property, creating an oversupply of dwellings and a subsequent extended period of flat values.
While this was punctuated by an upward blip in the mid-90s caused by the introduction of the First Home Owners Grant this merely served to pull forward existing demand, creating a “black hole” in 1998/9.
This is an edited version of the QUT Business Week Public Lecture delivered on 30 September 2003 at the QUT Gardens Point Campus in Brisbane. Click here to download the full text (Word doc, 87Kb).
Discuss in our Forums
See what other readers are saying about this article!
Click here to read & post comments.