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Westpac is predicting that the housing market will not decline as severely as previously expected, despite the warnings of higher interest rates and a weaker economy.
Bill Evans, Westpac’s Chief Economist, has even declared that Australia’s house price collapse “is largely over,” thanks to a large increase in migration, and a low supply of housing as contributing factors.
“This shift has come despite further official rate rises in February and March,” wrote Evans.
“Housing recoveries in the past have only tended to flow through to prices once the RBA is actively cutting rates or is very clearly poised to do so. Price gains also tend to follow a sustained lift in turnover, not vice-versa.”
In the March quarter, property values increased – though only slightly — at 0.6%. But are we seeing a turning point? Could this be cause for hope among first home buyers and mortgage holders?
Mark Bouris joined Sky News Australia to discuss Westpac’s predictions, stating, “Bill is about right on most occasions.”
“What Bill is saying is that the March quarter increase in house prices, Australia wide, was 0.6%. Instead of predictions that had a peak in house prices two years ago, to a trough now of 16%, he has gone back and predicted a 10% fall in house prices.”
“We’re probably there now as we’ve already gone down by 10% across the country so therefore he’s basically saying from here on in we’re going to see price rises at a steady rate.”
So will we see an immediate boom in house prices again?
Not immediately, according to Bouris, however, “there’ll be another boom in due course. But right now he is just saying it’s going to stay steady and just continue to rise.”
“What could create a better than ordinary price increase, or in other words, an increase in house prices of more than 5% per annum, would be a continued influx of immigrants into the country and a continuation of the massive undersupply of property in Australia. There is currently a massive under supply relative to the demand.”
Mortgage Stress not being equally shared
Bouris informed Sky News host Peter Stefanovic that there are 100% of homeowners in particular postcodes experiencing mortgage stress in Australia.
“There are various postcodes around Australia – in Sydney, Melbourne, Brisbane, Tasmania – not so much in Adelaide or Perth but certainly in the East coast … 100 per cent of those people that were polled randomly are feeling mortgage stress right now,” he told Sky News Australia.
“Places like Campbelltown in Sydney, many places in the outer west, and Rooty Hill and some places like that are also experiencing mortgage stress.”
“Equally there are places in Melbourne, but it’s not spread equally across Australia so there are plenty of places that are not actually feeling any mortgage stress right now.”
“So it’s not equally spread.”
With the RBA set to meet next Tuesday to decide on the official cash rate, having increased interest rates 10 times to 3.85% per cent since last May already, many homeowners are concerned about the RBA’s next move.
Are you concerned about the recent house market crash? Click the video above to see Mark’s appearance on Sky News Australia in full, as he discusses this and much more.