12 Dec 2022
Words Trudy Crooks Informer 105

A year of mixed fortunes

Despite bad news in the headlines, there’s plenty of good news for our industry. 

They don’t call it the silly season for nothing — and from what I’m seeing this Christmas is going to be crazier than usual for all sorts of reasons.First, the bad news. The global economy is heading for a cliff, the cost of living is hitting the roof, and there’s a war in Europe, which other than being awful in itself is spiking prices at the bowser here at home. Everywhere we look, it’s wall-to-wall doom and gloom.

And yet…

Our vendors are looking ahead to a bumper Christmas. As we move into what’s shaping up to be one of the busiest festive periods on record, property owners and investors are looking back on a very strong trading year in 2022 

So, what gives? That’s what I’m getting asked a lot these days — how’s the market holding up? Very nicely, actually. But why? Well, there are a number of reasons.

Firstly, inflation.

This is forecast to peak at just over 8% in the December quarter of 2022. Strong inflation creates a great opportunity for sellers. MRs are businesses where costs can be passed on directly without impacting bottom lines.

For most MRs, salaries increase in line with CPI — this is very unique and one of the reasons it is such a popular model with banks. Strong salary growth is also attractive to new buyers, making now a pretty good time to sell. 

For other accommodation models, having travelled the country and met with vendors in every state over the past couple of months, I’ve found the vast majority have been able to move their tariffs in line with rising costs. 

Based on recent inspections, many owners have been able to pass on significant cost increases with little to no pushback from guests. 

Another driver is our Aussie dollar.

Against the greenback, it’s now around 10 cents lower than recent historical averages, which has two positive impacts for the accommodation industry. First, it makes for attractive market conditions for international buyers. Second, it makes overseas travel more expensive for Aussies, meaning we’re still riding the domestic tourism boom we’ve been enjoying as we’ve emerged from COVID lockdowns. Domestic tourism spending

is up by $1.9 billion on pre-COVID levels, with Queensland being the main beneficiary of those extra tourist dollars — we’ve seen a 64 per cent increase in the three years to August 2022, according to Austrade’s Tourism Research Australia. Additionally, household savings peaked at over 20% during COVID but have returned to their pre-COVID level of under 10%. In short, there’s still a lot of local money splashing about.

All in all, while the “new normal” has arrived with some anxiety in tow the property market is full of prospects and potential for investors.

Having settled 48 properties to the value of $100 million in the first quarter of this financial year, the ResortBrokers team is actively delivering results for clients across the country. As in most challenging circumstances, silver-lining opportunities are there for those who seek them out. END