Housing markets across the country are set to “remain generally subdued” next year, predicts a leading commentator.
Senior economist at The Domain Group, Dr Andrew Wilson, said a number of factors would cause house price growth to be “modest, at best”.
“Concerns over the performance of the national economy are growing, particularly in regard to unemployment,” he said. “Interest rates have remained at the current 60-year low of 2.5 per cent for 16 consecutive months, which is the longest steady sequence since 1997-1998. With a weakening economic outlook, particularly in regards to the jobs market, the case is growing for a cut in interest rates by mid-2015.
“Without improved economic conditions and the return of incomes growth and confidence, marginally lower interest rates, however, are unlikely to have a significant effect on housing markets.”
Dr Wilson said he expects house price growth in 2015 to hover around the inflation rate, and that interest rates won’t be the main driver of the market.
“The rate of growth in each city … will be dependent on local supply-and-demand factors rather than the overarching impetus of low and falling interest rates, which has driven markets generally over the past two years,” he said.
Sydney, he said, would remain the country’s strongest performer in the New Year.
“The Sydney housing market is set to remain the best performer, with growth likely to be at least twice the inflation rate. A top-performing local economy and the continued undersupply of housing will generate consistent buyer activity over the year. Inner- and middle-ring mid-price range suburban regions are set to continue recording double-figure prices growth.”