Taken from Property Focus
From an economic point of view, there are few places better than Mackay to ride out the volatility of world markets. Of all the countries in the world, Australia is one of the strongest and most stable. And of all the regions in Australia, Mackay has one of the best outlooks for years ahead.
According to RE/MAX Team Realty principal Bruce Higgins, the Mackay economy and housing market is largely insulated from the global financial crises and looming recessions.
"Australia is very well placed in the world market and Mackay is well placed in the Australia market," he said.
"The Australian market (and Mackay in particular) is the reverse of what's happening in America.
"America had a huge oversupply of housing but, in Australia, we have an undersupply of about 40 000 homes.
"Our housing just hasn't kept up with a high immigration rate and strong natural population growth."
In Mackay the undersupply has been magnified by the rapid expansion of coal mines and allied industries.
The major difference between Australia and the US, however, is the level of banking lending regulations. In Australia, when a borrower defaults on their mortgage, the bank can take possession of the property and any other assets if the property sale does not cover the full amount of the loan. In America, their practice of "non-recourse" mortgages meant lenders could take possession of the property but could not make claims against other assets or the income of a defaulting borrower.
"The mortgage arrangements in America encourage people to walk away from their home and their loan because they lose only a house that is worth less than the loan," Bruce said.
"America also had people selling mortgages to people who were never going to be able to make the repayments. They made their money on the loans they could write so they just wrote as many as they could, regardless of whether the borrowers could handle the loan."
This "sub-prime" mortgage market has collapsed, bringing down lending institutions and the insurance companies that insured the loans and the links those companies have around the world affect the global economy.
The Australian housing market, and Mackay in particular, will remain stable because our economy is still strong and demand will keep values high.
"House prices will be at least sustained or will rise in the not-too-distant future," Bruce said. "Demand for rental accommodation also will increase. That's from an Australia-wide perspective, but there will be more upward pressure in Mackay.
"As unemployment rises in the rest of Australia, experienced tradespeople will still find good employment in the mining and other industries. "These people coming into Mackay will create further housing demand."
Bruce said job advertising was a good indication of where Mackay stood in the Australian economy.
While unemployment figures were creeping up, job advertisements were contracting.
"All you've got to do is look at the positions vacant in Mackay and you can see our economy is insulated from the rest of Australia," he said.
"People say Mackay lives in its own economic bubble and to a large extent that is true. Everything points toward the housing market remaining solid. What the market needs now is a good dose of confidence. That's what we're starting to see now with the changes to stamp duty, interest rate cuts and a doubling of the first home-buyers grant."