My Cake Recipe Helps Me Decide Where Housing Is Heading, Not Joe Hockey           Written by David Lennox

 

Do you feel there is high coverage of Australia’s housing market at the moment?

Every time I read the press or listen to news and current affairs I hear someone talking about Australia’s housing affordability crisis, and whether we are in the middle of a bubble.

Does anyone understand what a bubble is? I personally dislike terms like bubble, crisis, boom and bust – they are designed to get you to read an article, not to inform you objectively.

When the Honourable Treasurer Joe Hockey steps onto our turf and explains to prospective first home buyers what they need to do to get into the market, I feel a response is required.   I don’t have a major issue with what he said – but it was maybe a touch insensitive to Sydney siders saving a deposit in a fast growing market.  It’s like the mirage in the desert which never delivers…the 10-15% required just keeps getting bigger and bigger…

Here at Vision we are not keen to be forecasters, we are not keen to be political, and we are not keen to overreact to the press.  However, clients expect us to have a view and to provide direction;  we try to do this with cool rational heads.

So I thought it was timely to tell you how we do that..

How do we form a view?

There is so much information in our industry that the process of ‘forming a view’ is like baking a cake.  We work out what ingredients we need, put them in a bowl, mix it around, then we let it bake, expecting it to rise, settle and then hopefully taste good.

Ingredients we use:

  • Economic forecasting – we use credible sources like BIS Shrapnel (we go to their seminars and receive their regular Australian Housing Outlook reports). We like forecasting because it is statistical and unemotional.  Of course, it is not a 100% science and we all enjoy the fact that economic forecasts can be wrong!  But this is generally because it is an extremely difficult exercise.  But we still look at them regularly.
  • Industry changes – we receive regular updates from lenders regarding their policies and interest rates. This gives us an idea of whether they are hungry for certain types of loans or whether they are reducing certain types of new loans.  In the current environment, it is a genuine fact that lenders have been told by APRA that they need to reduce their growth in their lending on investment property – CLICK HERE
  • Media – of course we look at the media as well. It is important to know what is being said to the mass audience as most of the questions we receive from clients stems from them listening to the news
  • Politicians – and we naturally need to hear what our law-makers are saing as well.

Recipe for housing diagram

The diagram on the left  gives you an idea of how we use those sources of information to form a view.

 

 

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[su_column size=”1/4″]  David blog profile   [/su_column]

[su_column size=”3/4″]  About the writer: Dave founded Vision with Matt Ivers in 2000. He oversees the strategic direction of Vision Property & Finance and ensures that systems are in place to support mortgage brokers and the admin team.  He has nearly 25 years experience in the mortgage broker and finance business, and is a trusted credit advisor to hundreds of happy customers. Make contact with  Dave at david.lennox@visionpf.com.au

 

 

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