New financial year outlook with Joe Russo
The perfect storm of rising interest rates and construction costs, pressure has been felt by both sellers and buyers of property. Applying wisdom and insight, Caydon’s Managing Principal Joe Russo has detailed how he believes the 2022/23 financial year will pan out for Caydon and the property industry.
When it comes to the property industry, Caydon’s Managing Principal Joe Russo has seen it all. One of the main reasons Caydon has remained a successful entity in the development world is due to experience, insight, and making decisions with due diligence. Riding the waves of uncertain times is familiar territory for Joe.
“We are definitely experiencing unprecedented times, due to rising construction costs but also because businesses want their staff back in the offices, most are taking a hybrid approach,” says Joe. Not one to dwell on obstacles, he quickly adds, “I am confident that there will be high demand again for apartments, due to lack of supply.”
When asked if there will be any other drivers for short-term growth, Joe believes that the resurgence of the Melbourne city centre as an attractive destination will be heavily influential. “The city, its restaurants, gigs, art exhibitions are all back open – it’s clear that people want to live around these amenities and have an easy commute to their place of employment.”
It is with this mindset that Caydon carefully selects each of its development locations. Due North, Rise, and HOME are all located within ten kilometres of the CBD, meaning residents are never more than 20 minutes from life's necessities.
As for who’s driving any demand, Joe elaborates that the bulk of sales is coming from downsizers who have sold their larger homes during the pandemic and are now looking for a low maintenance lifestyle with added security. Caydon has observed an upward trend of enquiries coming from both interstate and overseas purchasers now that borders have reopened – not to mention migration and travel reigniting post-pandemic. Moreover, many first homebuyers are able to take advantage of the money they have saved during the lockdowns and restrictions. It’s a mixed bag, but a sustainable one, nonetheless.
One of the most definitive factors for Australians wanting to purchase a home in the short to medium term is interest rates. While the latest hikes can be daunting for some, Joe stresses that it’s not all bad news. “Increasing rates are a good thing as this will help reduce inflation and is a sign that we have a strong economy. We haven’t seen any rises in the last 11 years so whilst the current rises are not ideal, rates are still at historical lows.”
Caydon as a wider organisation echoes this glass-half-full sentiment. With the Rise and HOME developments, purchasers can make a purchase knowing that today’s rates will be locked in. When it comes to Due North, first homebuyers can typically get great introductory rates from the banks.
Another prevalent issue being faced by the development industry as a collective is increased construction costs. In fact, the cost to build has risen by 45% in the past eight to 12 months. Caydon has addressed these issues with a cool-headed approach. “Caydon buyers are lucky in that we are selling projects that were priced two to even five+ years ago,” Joe says.
As to whether or not interest rate hikes or rising construction will be resolved in the next financial year, Joe concludes with a grounded statement: