THE RECENT UDIA MARKET PREDICTIONS LUNCHEON GAVE SOME GREAT INSIGHT INTO THE VIEWS OF INDUSTRY ON WHAT TO EXPECT IN THE MARKET IN 2015. WITH 550 INDUSTRY REPRESENTATIVES IN THE ROOM, THE EXPERT PANEL DECIDED TO PUT THEM TO WORK BY UNDERTAKING A POLL. IT WAS A PRETTY SIMPLE POLL; STAND UP IF YOU AGREE, SIT DOWN IF YOU DON’T.
The first question was “do you think prices will increase in 2015?” About 80 percent rose to their feet. The follow up question showed sentiment was less than bullish with the majority sitting when asked if prices would rise more than 3 percent.
The next question was “do you think there will be an interest rate rise?” Roughly 75 percent of participants stood. The next question was “do you think there will be more than one interest rate rise?” That was greeted with the vast majority sitting down leaving only a handful believing that the Reserve Bank of Australia will lift the cash rate on at least two occasions in 2015.
Interest rates were certainly a topic of discussion with some conjecture that the next move for interest rates in Australia may be down. Reasons for that include the softening of the language used by the Reserve Bank in their monthly statements and the need to continue the economic restructuring from mining to construction jobs. Although the Sydney market has been overheated, strategies other than interest rates are being called on to manage that situation.
Housing affordability was explored by presenter David Cannington, Senior Property Analyst for ANZ Research, who showed that Perth is sitting below the long run average with current affordability comparable to that experienced in 2002/03. This has continued to fuel confidence even though population growth has returned to more sustainable levels. Price growth however, is likely to be contained due to the constrained wages growth.
The other discussion was about the notional dwelling shortage. Ever since the National Housing Supply Council estimated that we were around 32,000 dwellings short in Western Australia there has been debate about just how many dwellings are required. David Cannington, Senior Property Analyst for ANZ Research, showed data which predicted a shortfall of nearly 80,000 dwellings by later this decade.
As with all market predictions, experts weigh up all the factors and look back through history to see the likely outcome however very few are able to consistently identify those nuanced signals which influence market sentiment.