Market withstands the winter chill
Australia’s capital city housing markets performed well throughout winter, providing the prospect of a robust spring selling season.
House price growth will, however, stay mixed over the remainder of 2014 and into 2015 as the waning effect of historically low interest rates and under-performing local economies impact on homebuyer activity, according to LJ Hooker’s Quarter 3 myMarket Report. Click here to download a copy of the report.
Low interest rates have been a key catalyst in the revival of housing markets over the 2013–2014 financial year, releasing pent-up demand and stimulating house prices in all capital cities.
Price growth has varied significantly between the state capitals over the past year. Sydney was the clear leader recording boom time, decade-high results, with Melbourne also producing relatively strong house price growth. Brisbane, Adelaide, Perth, Hobart and Darwin achieved moderate outcomes, while Canberra recorded modest price growth over the year.
Over the six months to June, price growth has moderated from the December quarter peak, with less disparity now expected between capital city results.Sydney and Melbourne are expected to record more sustainable levels of house price growth over the remainder of 2014 compared to the high growth experienced over the same period in 2013. Flat growth in real incomes will affect the rise in house prices. With that said, Adelaide, Brisbane, Hobart and Darwin are set to experience similar growth to that recorded over the same period last year.
The outlook for the national economy remains challenging, with higher unemployment and a low income and profit growth. A high level of economic disparity remains between the states, with local markets exposed to increasing unemployment likely to experience lower house price growth.
The cash rate is likely to stay on hold for the remainder of the year, with future economic stimulation coming in the form of a weaker dollar and improved consumer confidence. However, greater competition among banks may further reduce mortgage rates, assisting the recovery in house and unit construction.