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2016 - Year in review

2016 - Year in review

2016 has been a year in which expert opinion has been exposed as little more than crystal ball gazing, whether it be Brexit, the US election or Australian real estate.

Looking back at the pundits’ picks for 2016 there were few who accurately forecast that Sydney prices would continue to defy the usual seven year property cycle. Instead of levelling off or at least moderating, Sydney real estate has continued to rise in value at a surprising rate.

While those who’ve profited from the escalating prices have had plenty of reason to cheer, the trend has caused more alarm than jubilation and contributed to a lack of listings throughout 2016, thereby perpetuating the problem.

In fact the word most commonly associated with Sydney real estate this year has been affordability, or the lack of it. It caused political hand wringing at a national level with the issue of negative gearing becoming an election battleground between Labor and the Coalition.

The real estate industry joined forces to lead an education and awareness campaign and though the election should have settled the matter it continues to crop up in the continuing discussions about house price escalation.

Support for the broad scale removal of CGT concessions and the abolition of negative gearing merely highlights the Sydney-centric attitude of so many politicians and commentators, ignoring what is happening in the regions and other States. WA is struggling in the aftermath of the mining boom and Queensland’s real estate recovery has hit more than a few speed bumps. Victoria’s prices are moderating as increased supply allows the market to find its own equilibrium while regional NSW towns, other than those within the orbit of Sydney, continue to see marginal growth at best.

So all in all, it’s Sydney that has the problem, yet the way that public debate is evolving, the measures identified are likely to be broadly applied across the entire country, regardless of the regional situation and the wide ranging unintended consequences that will flow.

It’s a problem resulting from an economy in transition and an infrastructure boom that is addressing decades of neglect. It’s a problem of plenty yet history and economic data tell us that there lies the danger.

Household debt is high but provided jobs remain secure it is manageable though much will depend on interest rates which have already begun to creep upward outside of Reserve Bank decision-making.

Affordability constraints also saw the emergence of rentvestors as a force amongst first home buyers, a trend that will likely continue through 2017. It may not be the method by which the millennials’ parents began their property journey but it’s an intelligent way to build equity in property.

In a year that was constrained by limited listing activity Richardson & Wrench welcomed several outstanding operators to the group, among them Blacktown, Maitland, Goulburn, Branxton and a merger with First National North Sydney to form a major R&W North Sydney office.

For our network the most significant event of the year was the acquisition of the franchise group by Andrew Cocks, six years after he’d been appointed to “renovate” R&W to be fit for the modern era of real estate.

That the network continues to attract outstanding talent confirms the growth strategy that Mr Cocks has implemented over the years and the value of backing quality over quantity. Expect 2017 to deliver more of the same.

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