March 2021 Update
Just like that summer becomes a fading memory and Autumn begins its grand entrance on the coattails of rolling storms. As autumn makes its presence felt, we would like to extend our sincerest thoughts and best wishes to those currently affected by the flooding across SEQ and NSW.
Property, Shares and Economics
With little signs of slowing, the property market continues to move from strength to strength, propelled by near historic low vacancy rates, particularly in the Brisbane residential market. Hobart continues to hold the lowest vacancy rate of our Capital cities, while over the past 12 months Darwin’s vacancy rate has fallen by 80% to 0.8%, conversely Melbourne’s vacancy rates have doubled, increasing to 4.6%, though this is showing signs of improvement.
While the outcome of being a landlord has improved for many investors, it’s not a tale of consistency across the city. It wasn’t that long ago many landlords were experiencing drastic rental income reductions when the COVID-19 tenant protections were introduced in 2020. If we assess the data in a more detailed manner, we can generally see inner-city areas are still suffering from staggeringly high vacancy rates, as residents continue to show a clear preference for living outside the city.
It is difficult to fathom the sheer scale of turnaround in property markets in just 12 months with most traditional property statistics now showing near record growth, record prices and low vacancy rates. Many major institutions are predicting strong property value growth in 2021 and 2022 particularly for new home sales. Who says the property market is not as volatile as share markets?
March marks an official turnaround in business and consumer confidence. An air of optimism is sweeping the nation for the first time in almost two years, including a 50% improvement when compared to 12 months ago, as the outlook for personal finances and business operations exhibit a robust recovery. For this to be sustained it is expected the virus will need to maintain its ‘supressed’ state locally and citizens have come to expect a full and successful rollout of the vaccine. It feels a little eerie that we are writing this on the eve of a three-day lockdown across Brisbane…
Despite house prices roaring to record highs in much of the Sunshine state, consumer preference remains tilted toward shares (over property) as the preferred growth investment vehicle. However, the unbeaten security of cash continues to be the most preferred investment class of all by a three to one margin.
2020 left many with a desire to create larger cash reserves and ultimately rebuild their balance sheet (asset allocation) to hold greater security and resistance to extended lockdown circumstances.
Naturally, we would expect a balanced approach towards cash and investing will yield greatest results, particularly as the largest shift in confidence has been towards improved economic conditions over the next 1 to 5 years. Interestingly, this coincides with the largest spike in consumer intention to purchase a major household item, so I guess we have to wait and see how long those cash reserves actually last!
The 12-month surge in local share markets seems to be slowing, in March we have seen the curve flattening and even beginning to dip. While I use the term ‘flat’, the actual volatility day to day has been quite high, raising and falling by over 3% within a 7-day period. Time will always help to flatten out these precarious periods, however it is worth being aware that volatility is high despite not necessarily seeing this in your quarterly investment or superannuation statements.
International share markets continued to perform well for the period, particularly the US market, while the Aussie dollar peaked in late Feb (roughly $0.80 USD per $1.00 AUD) and has now fallen closer to $0.76 USD (a reduction of around 4% to 5%). If this trend continues, March might be one of the rare occasions in over a year that currency movement will contribute positively to the value of US shares. In general, March saw the Aussie dollar trending upwards against many of the other remaining major international currencies, although it has been a mixed result against the British pound sterling (GBP).
It’s worth restating that investors are expecting positive outcomes with the pending and gradual COVID-19 vaccination of the country. If the rollout underperforms, or coverage fails to meet expectations, investors optimism may take a hit.
SAVE THE DATE: 7th August 2021! The dozzi Casino Royale is Back!
Roll out the red carpet and call the Brisbane Times, our Casino Royale Event is back! First held in July 2018, we are once again hosting our client appreciation event, this year at the Victoria Park Golf Club. Save the date for 7th August 2021.
This is our annual client appreciation and fundraising event focused on bringing our clients, friends and family together for a night to remember. For those of you who attended this event in 2018, you’ll recall the focus we had on relaxing, having fun and ultimately taking time to enjoy ourselves, with all profits of the night donated to one of our charities – Mater Little Miracles.
If you’ve raised a child in Brisbane, you’ll likely know the amazing role the Mater Children’s Hospital provides to the community, so this year we will again be pledging all surplus funds raised to Mater Little Miracles to help them continue their remarkable work for so many Australian families.
This year we will be doing things a little differently, providing reserved table seating and a multi course menu so you can enjoy a little bit of rest and recovery on the night.
You can expect the same focus on fun, laughter and community for this event, as well as special pricing for early bird ticket purchases and larger groups. We look forward to welcoming you, your family and your friends to this unique event.
End of Financial Year – Time to book in your meeting!
It’s that time of year we all need to give additional consideration to strategy and opportunity. Proactively planning for end of financial year (30 June) can reap substantial rewards in maximising your entitlements to strategic opportunities and minimising tax. Please make certain you book in with your adviser to ensure we take advantage of all opportunities and finish the 2021 Financial Year strongly. This strategy work is just as valuable when conducted remotely so don’t worry if you can’t make it into the office.