It’s the question that always gets asked, but is never really answered: are the property markets easing?
Market predictions are challenging in the most stable of environments so during periods of uncertainty, it’s almost impossible to foresee what the future holds. What we can do is look at the facts: assess sales data, listen to what the experts say and watch where interest rates move.
So, what are the facts? In recent weeks, auction clearance rates nationally have dipped below 70 per cent and although the official cash rate remains stable, banks are moving interest rates upwards – particularly on investor and interest only loans in response to heavier government regulation.
The most recent forecasts from the private sector all tell the same story: we can expect to see price growth ease. National Australia Bank believes house price growth will halve to about 4.3 per cent next year. ANZ say growth will slow to 4.4 per cent this calendar year and further to 1.9 per cent next year. KPMG have predicted a moderation and contraction in house prices, consistent with the Australian Bureau of Statistics figures released in June that confirmed a slowing in price growth when compared to the levels seen in the December quarter.
What’s important to note is the rate of growth that we’ve seen over recent years is unprecedented which also means it’s unsustainable in the long term. A slowing of growth doesn’t necessarily equate to a housing crash, but we are at a turning point in many markets.
So, the message here is this: be alert but not alarmed. There is strength in property markets; there are still active buyers and we’re still achieving solid sales. What we’re seeing is many markets beginning to return to more sustainable levels – and this isn’t out of the ordinary.