- Boost to listing volumes has eased price growth and settled clearance rates
- Price growth still evident but slowing, quelling fears of a housing bubble
- Cash rate unlikely to increase at final 2021 RBA meeting tomorrow despite public pressure, proposed 2024 pathway deemed appropriate by REINSW CEO
Fears of an impending housing bubble burst have been soothed by cooling house prices, according to REINSW CEO Tim McKibbin.
Although research on behalf of Dacxi indicated four in ten Australians believe we are in the midst of a housing bubble, the cooling prices may be dousing the flames.
Supply surges with no wind-down sighted
According to the latest REINSW market forecast, the supply surge agents anticipated as lockdowns lift has gone full steam ahead.
The supply surge has brought with it cooling prices and settling clearance rates, while activity has remained strong.
Despite the festive season being in full swing, the market momentum is set to continue with no wind-down in sight.
“Auctioneers are reporting a high volume of bookings through December and into
January and February, there’s reportedly increased interest in apartments, and investors
are coming back into the market in greater numbers,” said Mr McKibbin.
Price growth eases, quelling bubble concerns
While price growth across Australia is still evident in the latest SQM data, the rate of growth is losing steam.
The easing of price growth is music to the ears of property experts, subduing concern of a pricing collapse brought about by a housing bubble burst.
“For those in the industry as well as consumers, the recent cooling in prices is positive
news,” Mr McKibbin said.
“Not only does it quell bubble fears, it protects the recent value growth experienced by property owners while at long last delivering more choices for buyers who have to date missed out.”
Tim McKibbin, REINSW CEO
Mr McKibbin did acknowledge, however, that price growth has not come to an end altogether.
“But price growth is still apparent. CoreLogic puts Sydney prices up 1 per cent in
November, with the median house price increasing 29.1 per cent over the first 11
months of the year to $1,360,543,” he explained.
Cash rate likely to remain unmoving
Despite calls for the Reserve Bank of Australia (RBA) to increase the cash rate to cool the housing market, this seems unlikely to go ahead when the RBA gather tomorrow.
“The Reserve Bank meets for the final time in 2021 tomorrow and while rates will almost
certainly remain on hold, the noise surrounding the next rise is increasing,” said Mr McKibbin.
RBA Governor Philip Lowe said in September the economic conditions that will prompt the RBA to increase the cash rate are unlikely to occur until 2024.
“Given the environment of rising housing prices and low interest rates, the Bank is monitoring trends in housing borrowing carefully and it is important that lending standards are maintained,” said Mr Lowe.
However, only time will tell if the RBA will bend to public pressure and alter the cash rate sooner.
“There are plenty of variables for the RBA to consider but cooling house price growth takes some of the pressure off. Further macroprudential measures to limit borrowers are expected too.”
Tim McKibbin, REINSW CEO
“We see the current path to a 2024 rate rise as appropriate, though it will be interesting
to see what 2022 brings,” Mr McKibbin concluded.
