Property market at top of cycle: Martin Hawes
By Andrea Milner
Looking at the current state of the property market, for which Hawes says the drivers are immigration, affordability and yields, he describes immigration as “down but not dead – neutral at present”. Affordability, he says is “terrible” – the least affordable since this has been measured by factors of property values, interest rates and wages.
Yields are the rental amount compared to the property value. Hawes’ yield benchmark is a net 6-7%, but he says yields presently average 2%. On the fundamentals, most properties are overvalued, according to Hawes. He thinks they may get more overvalued and stay that way for some time, but will not stay overvalued forever.
The market is currently driven by pent-up demand, says Hawes, from both first homebuyers and investors motivated by “rah-rah” seminars. Other drivers are the plenitude of stories about making money from property going around, and the fact that there are “no compelling investment alternatives”, combined with pressure to look after ourselves in our retirement.
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