Tis the season for two Christmases in NSW, but no guaranteed property price gift for 2014
The sentiment surrounding the property market, with regional differences, is increasingly optimistic.
Indeed just 5.8% of respondents expect property prices to decline over the next year, according to the Westpac-Melbourne Institute Consumer House Price Expectations Index.
Around 74% expect prices to rise in the next 12 months, with 12% expecting a gain of over 10%.
Price expectations are the highest in Victoria. The expectations are more subdued in Queensland and WA.
Source: Westpac The Red Book
There's another index that tracks sentiment on ‘time to buy a dwelling’ - which posted a rebound in November after a sharp fall in October which perhaps was in response to higher prices and/or concerns about overheating.
This index showed a very strong increase in NSW, solid rises in Western Australia and Queensland but falls in South Australia and oddly in Victoria.
Source: Westpac The Red Book
Property, not unsurprisingly, does rank highly in the ‘wisest place for savings’ question in the accompanying Westpac Consumer Risk Aversion Index.
Accompanied by a decline in the proportion nominating interest-bearing deposits (–10pts) and pay down debt (–6.7pts), there's new favour for real estate (+7.7pts) and also shares (+3.3pts).
At 27.5%, the proportion favouring real estate in the latest survey was the highest since September 2003.
Source: Westpac The Red Book
However Westpac noted moderating views on the time to buy a dwelling, along with the still high unemployment expectations, all pointed to growth in finance approvals slowing in 2014.
Westpac noted last week's ABS that indicated finance approvals have shown a clear pick- up in investor activity - with the value of home loans to the segment up 22% over the past year.
"That is from a low base though, and is being partially offset by repayments on existing loans with a muted 3.2% rise in the real value of investor loans outstanding, compared with the 20-25% growth in 2003."
This restrained spending apparently will be reflected in our Christmas spending plans.
"The results show consumers are again looking to restrain spending," the Westpac survey showing 35% intend to spend less than last year; 51% are planning to spend the same and 14% plan to spend more. That is little changed from the recent lacklustre Christmas seasons.
However consumers in NSW are much less restrained compared to the last four years, Westpac senior economist Matthew Hassan said.
All other states are showing more restraint than last year, with sharply weaker spending intentions in Victoria, WA and SA.
"Queenslanders are the most downbeat though, with nearly 40% planning to spend less this year," the survey suggests.
This envisaged continued consumer restraint suggests fears around job security.
And unemployment will, unless interest rates head upwards in 2014, be the key factor in how the 2014 autumn selling season progresses.
The freshest 2014 forecasts are only just begining to emerge from property commentors.
It would seem moderating increases in property prices could be the likely outcome.
The 2013 Sydney spring market was "your one-in-a-hundred-year auction market," said Dr Andrew Wilson, the senior economist at Australian Property Monitors who expects Sydney prices to peak this quarter and level out in the 2014 first quarter.
So two Christmases for NSW this year, but no guarantees for 2014 as we brace for a potentially significant weakening in labour markets.
