The Year Ahead – A 2015 Outlook with Tim Lawless The housing market is moving into the 2015 calendar year with some substantial momentum, with dwelling values 8.5% higher compared with a year ago across the combined capitals. The growth comes on a backdrop of slowing conditions though, with the annual rate of capital gain peaking early in the year at 11.5% over the twelve months ending April. While values are still rising at a healthy rate, at least at a high level and in trend terms, we anticipate that 2015 will see the housing market dynamic shift geographically. Conditions are clearly softening across Perth, Darwin and Canberra and we expect this trend to continue. Sydney and Melbourne have been the stands outs for capital gains over the current growth phase, however the level of growth compared with last year is now lower as some heat leaves these markets. The markets where there has been some acceleration in the rate of capital gain over the past year are Brisbane, Adelaide and Hobart. These are likely to be the cities to watch for a stronger performance over the coming year. Regionally, we are expecting lifestyle markets to continue their bounce back in buyer demand and values. At the same time, the downturn in commodity prices and mining related infrastructure spending is likely to continue to dampen housing markets across resource intensive regions. Central to housing market performance will be the direction of interest rates. There is growing debate that the next rates movement may be down rather than up. A further reduction in the cash rate will bring mortgage rates even lower than their current record low settings. Theoretically, lower rates should provide a boost to housing market conditions, however, if this stimulus does transpire, it is likely to be balanced by pervasively low consumer confidence and softer labour markets. Additionally, the impact of the recent APRA announcement around investment lending may act to restrict the availability of finance to investors. The banking sector will be under scrutiny to keep growth in investor loans at slower than 10% pace of growth which is likely to have some downwards pressure on investor related housing demand. Overall we are expecting another solid year of housing market conditions and further capital gains, albeit at a more sustainable rate that what we have seen over 2014
Posted on: Sat, 10 Jan 2015 05:54:12 +0000
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