Gazing into the crystal ball and forecasting what the future will bring is alway fraught with danger. However having been through 5 property cycles over the past 30 years I thought I would be brave, stand up on my soapbox and throw out a few predictions for the rest of this year in regards to the property market.
My impression is that potential property market participants (buyers and sellers) have been waiting to get going and have now run out of excuses not to. Generally people have their preferences and their needs. When property market sentiment turns negative, their preference is to take a wait and see approach. At some point their needs overtake their preferences and they look for excuses not to do anything, even though they want to. This year those excuses were the Banking Royal Commission and the Federal election.
They are now over and there is a clear pathway forward that has few surprises or dramatic changes. People love stability as a platform to transact from. It gives them confidence. Added to that is the news that lending restrictions are to be slightly eased, which will increase the number of market participants and interest rates are likely to drop. With interest rates, it’s
not really about the amount because they are at ultra low levels, it’s about the trend. They are going down, not up. Employment levels are also relatively stable.
My predictions are that you will see activity in the property markets around Australia increase quite quickly because Australians famously suffer from FOMO (fear of missing out) and buyers will want to get in before prices start to rise again.
I believe (against all the economists current predictions) that there will only be one interest rate cut of 25 basis points. The RBA will see the housing market quickly recovering and hold fire on more cuts.
Auction clearance rates in Melbourne will hold in the 60-70 percent range for the rest of 2019 with the exception of a couple of weekends in Spring where it will break the 70% range. You will also see lending approvals surge up from current levels due to easing of restrictions and increased applications for finance.
I am not making any predictions on price movement because it’s too hard to predict although I believe there will be very little downward movement from here.
The only caveat to all this is an external international economic event that we didn’t see coming but domestically, we look in pretty