Welcome to the Spring Edition of the Cambridge Private Wealth Newsletter.
There is a lot happening around the world as you know, however the potential disruption of markets caused by global events is largely being ignored by US markets as they continue to reach record highs. The fear of missing out may be one reason for people buying into a market that offers very little value. This has caused very low volatility in the sharemarket, possibly similar to an eye of a cyclone, but let’s wait and see if the volatility is near.
Australia has a severe lack of leadership at present. Unfortunately the past lack of investment into a diversified economy through the investment of the proceeds of the mining boom has led us to the continued reliance of mining and housing as well as high levels of immigration. On the flipside, the retail environment has suffered as debt overhang takes hold, strangling the consumer’s ability to purchase non-discretionary items. It will be interesting to see how the Government handles the continued issues within its own party and with other issues like energy.
Always welcome any calls of enquiry. Stay safe and happy in the meantime.
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Home Prices keep booming in Melbourne
Property prices in Australia are perplexing and continue to grow on an aggregate measure in Melbourne. Over the last 12 months, as you can see below, Melbourne has grown by the largest amount compared to all other capital cities.
Over a longer term, Sydney and Melbourne are clearly winning the race for the price rises as seen below:
The main reason behind Melbourne’s rise to the top is immigration. We are leading the way here. Other factors of course are low interest rates, the marketing of both Sydney and Melbourne as global cities particularly to Asia regarding lifestyle and education, and the tax benefits of investment properties.
While it is not apparent yet, I think the more flexible the workplace and the more efficient the infrastructure, the more the propensity to buy inner city properties will dissipate, resulting in the growth in these areas slowing. The greatest impact on property in Melbourne will be the following factors:
- Interest rates increase
- Continuation of low to no wage growth
- A sharp decline of immigration
If we refer to the last point, global political movements would have me believe that immigration will slow in the future, however when is unknown. If immigrants and first home buyers are priced out of the Melbourne market, Brisbane and other cheaper cities may be beneficiaries.
Cambridge Private Wealth Pty Ltd (ACN 607 806 244), Authorised Representative and Credit Representative of Charter Financial Planning, Australian Financial Services Licensee and Australian Credit Licensee.
General Advice Warning – This newsletter contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider you financial situation and needs before making any decisions based on this information.