October housing prices: Pete Wargent

October housing prices: Pete Wargent
October housing prices: Pete Wargent
CoreLogic-RP Data already appears set to report further dwelling price growth in October for Sydney, with prices once again up at a sprightly pace and moving another +$5,300 higher. 
 
There has been plenty of spirited debate in the media about what comes next for house prices in Australia.
 
Macquarie has suggested that a housing market correction of -7.5 per cent could take place - beginning some time in 2016 before ending in 2017 - while Stockland's Mark Steinert disagrees and sees prices continuing to rise by +3% to +5% through next year.
 
This pretty much tells you everything you need to know about short term property market predictions: one analyst thinks prices will rise, another thinks they'll fall!

Central Bank

What about the role of the Reserve Bank and monetary policy settings?

Here's what central bank expert Sophia Rodrigues thinks:
 
October housing prices: Pete Wargent
Long term focus

Property owners would do well to retain a long term outlook rather than waste too much energy on short term dwelling price predictions, which are invariably a hit and miss affair at the best of times.
 
As for the bubble/crash/correction calls which have continued over the past 15 years or so, Sydney median house prices now need to suffer an enormous correction - a gargantuan fall of $300,000 - even just to get back to where they were a couple of years ago in June 2013, let alone to actually correct from there. 
 
 
October housing prices: Pete Wargent
 
Market variances

One thing that can be said with some certainty is that there will be significant variances across the Sydney property market.
 
Outer suburban auction markets in Sydney have already turned in favour of buyers with clearance rates tanking fast in the west, south west, and north west sub-regions.

More stringent deposit requirements appear to be biting hard in the outer.

On the other hand clearance rates have remained relatively elevated for now in the eastern suburbs, the inner west, lower north shore, northern beaches, and the city & inner south.

Higher density markets will also almost certainly fare less happily than the metropolitan averages due to a looming stock overhang.
 
October housing prices: Pete Wargent
 
In terms of other market drivers, Sydney presently has a vacancy rate of around 1.7% but with plenty of supply now in the pipeline, while the unemployment rate for Greater Sydney is only 5.1%.

Implied yields on cash rate futures contracts are pricing a 100% chance of an interest rate cut to just 1.75% by April 2016.

This morning's Building Activity data release will shed more light on dwelling commencements and completions around the states.

Expect to see both commencements and completions respectively at close to their highest ever levels.
 

PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and blogger.

His latest book is Four Green Houses and a Red Hotel.

Pete Wargent

Pete Wargent

Pete Wargent is the co-founder of BuyersBuyers.com.au, offering affordable homebuying assistance to all Australians, and a best-selling author and blogger.

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Housing Market Home Construction

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