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Century 21’s outlook for property in 2011

With all the talk of housing bubbles and conjecture over whether Australian house prices are going to collapse, doyen of real estate Charles Tarbey, chairman of Century 21, joins Peter Switzer on his Sky News Business Channel program – SWITZER.

Tarbey explains that this is the third time it has been mentioned a housing bubble is going to happen in Australia. In December 2009, he read an article to his franchisee group that said six months earlier somebody had predicted that by December 2009, prices in Australia would have reached a point where there was going to be a crash in the real estate market.

“Now, if anybody had listened to that, they would have lost a significant amount of capital gain in the last year,” he says.

Australian property differences

Switzer explains that people like Associate Professor at University of Western Sydney, Steve Keen, were anti-house prices. Tarbey says while there is always the risk of rising interest rates, or any market collapsing, the Australian market can’t be compared with markets overseas.

“Our banking system is different – the way in which people borrowed in the US that caused this problem at the start just hasn’t occurred in Australia,” he says.

On house prices being too high, Tarbey says people in Australia live in much larger homes than other places around the world. They also like to live in the cities – “The regional areas aren’t anywhere near as strong as other countries” – and they want to live on the coast.

“Now, all those things cost you money,” he says. “And if people want a change in life, if they want to move out to the regional towns, they’ll probably get a better value – they may not get the job security they may get in the cities. But that’s one of the biggest problems – they compare Australia to the US or the UK when our landscapes are completely different.”

What’s ahead?

So what is the outlook for property? Tarbey says his recent figures show listed numbers are up around 47 per cent compared with this time last year. 

“It goes to show there’s still a lot of activity – people thinking about selling. I think the slowdown, the correction is here, and it’s already been happening for the last six months. Whether people might or might not accept that, the reality is that the correction has been in place, which means if it’s already been in place, a few months down the track, we may see a correction the other way.”

Tarbey says there is nothing wrong with property prices going up and down.

“That’s why you talk to people and you say ‘stay there – you don’t look at real estate as a short-term process’. So if it does dip, it will move up again. But to the extent they talk about, this is the third bubble that’s going to burst. It’s going to be a beauty if it happens.”

Check out Peter Switzer’s SWITZER on Sky News Business Channel, Monday to Thursday from 7pm.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Wednesday, February 02, 2011

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