We all know what the Perth residential real estate market is doing.
It’s crazy!
Sellers are getting BIG results, and Buyers are engaging in hand to hand combat to secure a roof over their heads.
And now it could get even harder for Buyers, with an interest rate rise predicted!
Inflation is not in check and experts are speculating that the Reserve Bank will pull the only lever it has. And maybe it won’t work.
So like a gin soaked grandma let loose on the pokies, they will pull the lever again.
And maybe it won’t work, again.
What could stop the interest rate lever working?
Well, you know that great lump of money that the Boomers have?
The demographic tidal wave, that swarm of post-war babies, they are ready to spend like it’s their last day on earth (and it might be!).
They are cashed up, there are lots of them, they DO NOT have to borrow, and they by and large DO NOT need to work.
Interest rate rises won’t touch them (in fact it will make them even more secure in their spending habits).
They are retiring in droves.
Downsizing the family home just releases even more of their wealth.
Fancy competing to buy an inner city townhouse with a cashed up Boomer?
The inflationary nature of this flood of generational wealth to the marketplace is perhaps only just being understood.
But there is simply more disposable cash for spending on stuff than there ever has been.
Against a backdrop of war in Europe and the Middle East, supply constraints, rising energy costs and increased immigration to Australia, the Boomer cash flood is just one more reason inflation is proving a difficult beast to kill in Australia.
And like Grandma at the pokies, all the Reserve can do is keep pulling that lever.
The problem with this is all those factors driving inflation are really not affected by increasing the local cash rate.
The Reserve Bank’s hope is that if enough of us with household debt hurt bad enough, and we stop buying smashed avocado, oversized drink bottles and cancel our Pilates classes, then there is a chance that inflation will be held in check – and interest rates will not keep going up.
The question is how many Australians will need to be economically devastated to achieve the seemingly impossible task of killing inflation?
There is plenty going on and so much to try and understand.
If you would like to discuss the market and your property’s current value, or potential sale strategies, don’t hesitate to get in touch.
Derek Baston
0417 99 23 24
sales@bastonandco.com
