Investors Rushing To Gold Coast

The Gold Coast property market may be getting an unexpected shot in the arm from the federal election.

After a quiet finish to 2018, during which the median house price rose by only 1.6 per cent and units  were down slightly by 1.2 per cent, Ray White Surfers Paradise CEO Andrew Bell has noted an increasing sense of urgency among buyers eager to lock in a purchase sooner rather than later.

These buyers were factoring in a change of government at the next federal election and the likelihood of changes to the tax treatment of investment properties, as previously signalled by Labor, he said.

“Elections often create uncertainty in the market, but this time it’s a little different because of proposed changes mooted by the Labor Party,” Bell said.

“The market is well and truly factoring a Labor victory and the likelihood of major changes to the taxation regime for property owners.

“Many are buying now to take advantage of the grandfathering provisions proposed by Labor for existing properties.”

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How Main Beach is the sweet spot

What is it about Main Beach that continues to lure some of the country’s – and the world’s – most influential business people, alongside a slew of celebrities?

Ray White Prestige Gold Coast agent Robert Graham says it comes down to limited stock along one of Queensland’s most tightly held beachfront strips, awesome weather and an impressive marina.

Bob East, former chief executive of the Mantra Group, says connectivity to two core business centres, Brisbane and Sydney, is another important ingredient.

After 12 years on the Gold Coast, East knows a thing or two about flying in and out. The chairman of Tourism Australia and deputy chairman of the Gold Coast Suns Football Club says for anyone whose job keeps them on the move, it’s a fabulous transit hub with the lifestyle advantages of the Gold Coast.

“We’ve got the Gold Coast airport and Brisbane airport is up the road. For any one of us living a life somewhere on the road, it’s fantastically serviced,” he says.

East believes the city is a terrific option for business folk needing access to corporate Australia but looking for the balance provided by the relaxed atmosphere and beautiful beaches.

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Reserve Bank leaves cash rate on hold

The Reserve Bank kept interest rates on hold at 1.5 per cent at Tuesday’s meeting, but the likelihood that the cash rate will be cut is increasing, with the central bank becoming less optimistic about the economy. Financial markets now believe there is an 80 per cent chance that the cash rate will be cut to 1.25 per cent by November this year.

Despite a shift in its forecasts, the RBA maintained the key line: “The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual”.

Although the unemployment rate remains low and jobs growth has been strong, recent economic data has mostly been weak and leading indicators suggest the economy will grow slowly in 2019.

There were few surprises in Tuesday’s commentary after a flurry of RBA communications over the past month: the RBA’s February Statement on Monetary Policy contained updated forecasts, RBA leaders appeared before Parliament and Governor Philip Lowe gave a wide-ranging speech in early February.

The RBA’s latest forecasts predict that the economy will grow more slowly

The RBA is less optimistic about the outlook for the economy than it was at the end of 2018. In the February Statement on Monetary Policy, the RBA substantially downgraded economic growth (GDP) and inflation forecasts for the next two years (see table). The RBA now expects GDP growth over the year to June 2020 to be 2.75 per cent, down from 3.25 per cent it forecast in November 2018. Much of this economic growth will be driven by strong population growth.

The RBA is also forecasting inflation over the next 12-18 months to be at or just below the central bank’s 2-3 per cent target band.

A string of weak data has contributed to a softer outlook for the economy. The construction sector is slowing, with building activity falling by 3 per cent in the December quarter. Building approvals, a leading indicator of future construction activity, were 28 per cent lower in the three months to January compared to same period the previous year. And the Housing Industry Association expects housing starts to decline from 226,000 in 2018 to 191,000 in 2019 and 180,000 in 2020, which would be the lowest rate of construction since 2013.

Consumer spending data has also been weak. The RBA sees weak income growth and falling house prices weighing on household spending as a growing risk to economic activity. Household spending accounts for about 60 per cent of economic activity, so lower spending has a big impact on the outlook for the whole economy.

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