After the news that auction clearance rates in Melbourne and Sydney were on the rise, there’s yet more good news for the property market.
The Commonwealth Bank of Australia’s (CBA) chief economist Michael Blythe believes the current readings indicate the market is turning.
Australia’s recent housing market weakness has been attributed to a lack of demand, but mainly down to low interest rates – and that is where Blythe is seeing change.
“The big question right now with interest rate cuts in place and tax cuts coming is whether policy makers have done enough to keep the Australian economic story on an even keel. The overall message about household spending intentions has changed over the first half of 2019,” Blythe said.
CBA’s analysis is based on its databases covering 2.5 million households and 16 million customers. Combining CBA transactions data along with household spending intentions from Google Trends search data, the results show a steady rise in demand in the market.
This optimism is backed up by a recent survey from ME Bank, that reveals Australians in the property market have become more optimistic about housing prices over the next 12 months.
In their most recent report, the bank found only 17 per cent of people expected housing prices to fall, compared with 28 per cent in April.
“Australians in the property market have become more optimistic about house prices, perhaps reflecting a number of changes in the external environment since the last survey,” ME Customer Banking group executive Craig Ralston said.
Combine this with the recent news that ANZ changed its forecast from its prediction in May, saying it expected prices to start increasing this year, and it appears the housing market is going from strength to strength in the first half of 2019.
AMP chief economist Shane Oliver expects prices to continue to improve over the next 12 months, especially in Australia’s two largest cities.
“If you look back at the past cycle, clearance normally leads volumes. If you look at the relationship between rebounding clearance rates and prices, this suggests that within a year or so prices will be up 10 per cent in Sydney and Melbourne,” Mr Oliver said.