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How will 2012 differ from 2011?
Thu, 22 Dec 2011It’s always interesting to look to the year ahead and to be curious as to what it will hold for you – What will you create? Equally interesting is to look back on 2011 and to ask yourself what you would have done differently if you could re-wind time back to the start of the year knowing all that you know today about the year that was – 2011?
Would you do things any differently? What would that be? Would you be happier with a better outcome? Although this is just hypothetical, perhaps there is a lesson here to carry forward into 2012.
Today people are both prudent and uncertain when it comes to the economy and to the property market. Most people in the market are unsure of the future and what may occur. However when are we ever sure of the future?
To look at 2012, we must go through a process that starts with ensuring we have the truth, good evidence and importantly making sure we have the whole story. Once you have these, and after trusting your instincts and having used reliable ‘sounding boards’, you can then cautiously decide considering both a male and female viewpoint and looking beyond the immediate result. The deal today is “are we getting the whole story?” In any event, we can only ask ourselves “is this the direction in which I wish to head in?”
A new year is a time of fresh hope and an expectation of prosperity. This is why property markets often recover from a downturn in the first half of a year, rarely the second half.
Will this be the case in 2012?
With fundamentals such as: Wages growth of 10.8% in WA in 2011, 2½ times the national average, a vacancy rate of 2.4% and falling, rising rents, falling interest rates and yet falling values, a decline in building costs and falling credit growth, all presents a cocktail mix which is unsustainable.
My guess is that the rising rents will put a flow in property values and when this occurs the wages and cost pressures will force values higher, albeit somewhat reluctantly. This is what I believe will occur in the Perth property market in 2012.
Meanwhile Europe will have economic problems presenting some risk of a credit squeeze in Australia. If this was the case it would be a good idea for people to have organised Lines-of-Credit in place today, but not to use them yet. Uncertainty, doubts and fears prevail at the bottom of a market cycle. When certainty returns, values rise, in fact have already risen. Whilst I can’t see certainty returning quickly, it will at some stage return. Part of this will show up in 2012.
Meanwhile life goes on and new hopes and plans will emerge for many over the Christmas and New Year break of 2011/12. My hope is that the 1,000 hours plus that I have put into property and economic research during 2011 will hold me in good stead for the year ahead. My wish is for a fulfilled yet simple life through 2012 that is not affected too much by fear and uncertainty from fluctuating markets. If 2008 to 2011 taught me anything, it is to expect the best yet have plans for the worst. I recognise that whilst being a rather extreme way to live, the global economy is turbulent and this is not yet over.
Article written by Gavin Hegney, Executive Chairman, Hegney Property Group, Perth WA.
