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Property market will 'stay hot'

By James Mitchell
3

Record-low rates will continue to fuel rising real estate prices, according to the head of Mortgage Choice.

Speaking at the release of the mortgage broker group’s December settlement results yesterday, CEO Michael Russell said the property market should continue to stay “relatively hot” as more people look to take advantage of the low-rate environment.

Mortgage Choice achieved a new financial milestone last month, settling $1.09 billion in mortgages.

“There is no denying the property market has been relatively hot for the last two years and, according to recent data released by the Australian Bureau of Statistics (ABS), there is still a lot of heat in the market,” Mr Russell said.

“The latest housing finance data from the ABS found more than 50,000 home loans were written in October, which is incredibly high by historical standards,” he said.

“Our brokers continue to take advantage of the spike in home loan demand and are using this time as an opportunity to grow their business and their bottom lines.”

Mr Russell’s forecast is at odds with the latest NAB Quarterly Australian Residential Property Survey, where expectations for house price increases over the next year eased back considerably with fears of falls in Perth.

On credit, housing credit growth maintained recent growth rates, with owner-occupied still around 5.7 per cent year-on-year in November and investor a touch lower, but still around 10 per cent on an annualised basis, according to NAB Group chief economist Alan Oster.

NAB expects average city house prices to cool to around four per cent to the end of 2015 and two per cent over the year to the end of 2016.

“Our assessment of the market remains that house price growth will continue to moderate because of rising unemployment, sluggish household income growth, affordability concerns, cost-of-living pressures and high levels of household debt,” Mr Oster said.

“We are also forecasting two further interest rate cuts of 25 basis points in March and 25 basis points in August 2015, bringing the official cash rate down to two per cent, which should support house prices a little more than previously expected.”

NAB expects Brisbane (5.7 per cent) and Sydney (4.1 per cent) to lead the market for capital growth to end 2015, followed by Melbourne (2.7 per cent), Adelaide (2.1 per cent) and Perth (1.8 per cent).

Dwelling prices in Sydney and Melbourne started to flatten towards the end of 2014, according to RP Data-Rismark.

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Highest annual price growth - click a suburb below to view full profile data:
1.
FAIRLIGHT 46.02%
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CASUARINA 44.36%
3.
THE ENTRANCE NORTH 41.09%
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ULTIMO 40.67%
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LAVENDER BAY 40.2%