No bubble and no need for macroprudential control: Craig James

We’re not in a property bubble, according to CommSec chief economist Craig James, but we are experiencing a “balancing” in Sydney.

With a slowdown in national home prices recorded by CoreLogic RP Data, and mixed results across capital city housing markets, James noted that there is no need for the Reserve Bank to progress with macroprudential controls on property investors.

“In essence, the market is correcting itself with more supply coming on to the market as evidenced by new listings and softer demand for homes in response to the higher prices. There is no bubble – demand ran ahead of supply in some capital cities like Sydney but markets are balancing,” James said.

With house prices down 0.3% in November and apartment prices up 0.1%, it’s not surprising that some are wondering if the growth is now over.

ANZ’s David Cannington has also focused on the easing down from the mid-2014 peak, but notes that positive home buyer sentiment and fundamentals still exist.

“Sydney house price gains are leading the pack, with a pick up in population growth driving strong underlying housing demand and solid capital growth attracting residential property investors,” wrote Cannington.

“Nonetheless, we expect house price momentum will ease heading into 2015 with house price growth in Sydney and Melbourne in particular likely to be weighed down by deteriorating affordability.”

Over 2015, he says that the affordability gap will weigh on price growth in Sydney, Melbourne and Perth.