House prices still robust: Stephen Koukoulas' end of financial year review
Last December economist Stephen Koukoulas gave his forecast for house prices in 2014.
"Having risen a solid 10% or so in 2013, house price growth is likely to taper somewhat in 2014," he tipped.
"A rise of less than 5% for the year is more likely as tighter monetary policy, a rebound in supply and some satisfaction of pent up demand works to take some house price heat out of the market."
This week he returned to review the progress, at the halfway mark commenting that "house price growth has indeed moderated in recent months although the trend still seems to be up".
He says for the first six months of 2014, house prices are up "just 3.3%, a little lower than I was anticipating but the lack of interest rate hikes is likely now to see house prices trend up a while longer, albeit at a more moderate 5% annualised pace".
His other forecasts are at his website.
"So the smart people like Louis Christopher from SQM Research and Pete Wargent from AllenWargent property buyers were right – the dip in house prices in the six week period around May was seasonal," he wrote recently.
"The housing market was still strong and prices were still robust even though the RP Data was showing what at face value were notable price falls.
"The RP Data house price series now shows that prices are up 1.3% so far in June (just one day to go) to largely reverse the 1.9% price drop in May.
"In recent weeks, the price rises have been solid which suggests further seasonal increases are likely in the near term, especially with interest rates remaining near record lows."
He noted even the RBA was caught up, a little, with the house price fall discussion, when it noted after the June Board meeting that "dwelling prices have increased significantly over the past year, though there have been some signs of a moderation in the pace of increase recently".
Koukoulas wrote: "For now, the recent house price swings are not enough to change the view that the RBA is on hold, including this Tuesday when it meets to discuss interest rates.
"With the economy seemingly softening in recent months with commodity prices down and the Australian dollar strong, the balance of issues to force the RBA to move rates in either direction remains finely balanced with house prices now back in the "hike" column."