Human Habitat | February 2019 Market Update
Compared to their global counterparts, Australians have an enthusiastic penchant for property investment, both in terms of long term capital growth but also as a place to defend the cultural capital of building a family, putting down deep roots, and creating home.
As real estate agents, we are frequently asked to answer questions about whether the current market is “good” and what makes a particular location a “good” investment.
At the highest level, property markets work like any other market, carefully balancing the forces of supply and demand.
Property prices are impacted by the demand that exists in any area for the supply of accommodation for people seeking to achieve a particular vision for ‘home’. In this way, we can think of buyers and tenants as drivers of demand.
In terms of making a “good” investment choice, you needn’t look any further than the factors that buyers and tenants are seeking in that ‘vision’ – and notwithstanding any temporary market fluctuations, the demand for accommodation will sustain markets.
In essence, we are looking for the features of prime human habitat: indicators of desirability in the natural, economic, and social dimensions of our towns.
Lead Indication of Prime Human Habitat #1 – Natural Beauty and Responsible Governance.
In terms of understanding the value of the area’s natural capital, the governance of the region has come a long way from original European settlement where the primary industry of the region was logging. Industry from the destruction of the region’s natural resources that so richly impact human desirability.
The governance now geared towards the conservation, sustainability and disaster recovery for the natural resources of the area is heavy with the introduction of Rural Land Use Strategy; Byron Biodiversity Conservation Strategy, The Master Plan, Tourism Destination Management Strategy, Pest Animal Management, and Community Strategic Plan provide the right regulatory frameworks to support a healthy and resilient natural environment.
Healthy natural environments support healthy human habitats and that impacts demand.
Lead Indication of Prime Human Habitat #2 – Investment in infrastructure and a culture of entrepreneurialism.
As a major tourist destination that is somewhat resistant to the seasonal lows of other destinations (think ski resorts in summer), the region enjoys regular private investment from visitors. It also attracts government-led investment in the town, in order to secure state revenues from this critical sector.
The stream of luxury income from visitors and infrastructure priority from the government are two key ingredients for a thriving private sector – entrepreneurial producers of artisanal products the drive local employment and industry.
Our region does this better than most and the road into town with Stone & Wood Craft Brewery and the Byron Bay Cookie Company Headquarters perched to encourage and promote the production of our region. Our region boasts the world’s best Gin distillery with Brookies, and a short walk around town and through Woolworths demonstrates the diversity of our produce from Corn Chips and Chilli through to find artisanal cheeses.
A thriving local economy of production is a buffer to over-tourism and balances the relationship with tourists as symbiotic, rather than parasitic.
Lead Indication of Prime Human Habitat #3 – Diverse social and cultural landscape.
You will not find a more diverse community than our corner of Australia. From movie superstars to surfer boys and hare krishna’s our towns are a rich weave of many fibres.
Homogeneity in any society discourages creativity and can create rigid social norms that prevent expression and authenticity. Byron and Northern Rivers Shires are without a normative culture but where the salient values are inclusiveness and tolerance.
Inclusiveness is a value that is good for demand. By widening the market demand segment to include everyone, then it opens up the ‘vision’ of home to a broader market than a community or area that is branded to a particular style of the resident.
So, while we monitor the minor fluctuations in all kinds of market metrics like average price (holding nicely), days on market (up a little), finance clauses (taking a little longer); it is important to remember that not one of these factors is capable of overriding the most important factor in any property market: demand, and the probability of sustained demand.
Looking at the factors that are both driving and maintaining demand with sustainability in their design, we are confident to be able to answer the question “How is the market?” with positivity and confidence for a very long time.