Here’s a good one from Stockland today:
Australia’s housing recovery should last for at least another three years says Mark Steinert, the chief executive of the nation’s largest housing developer, Stockland.
Driven by rising confidence and the underlying population dynamics, the improvement in housing will not be stopped by a rise in mortgage rates.
“To some degree, it is how long until there is major recession or a major shock,” said Mr Steinert.
“The driving factor is not interest rates; it is confidence. Interest rates were stimulatory at the beginning of the year but markets were flat.”
“The economic growth that we are seeing is broadening out because the dollar is lower.
“If interest rates were to back up 100 basis points, or 150 basis points, you would see some volatility but you would not affect the overall demand
“You cannot get away from the fundamentals. Look at the demand supply equation and at migration. We will have population growth of 1.5 per cent.
“The recovery should last for the foreseeable future. ”
Never say never but the odds of this are low. I give the housing rally another six months into the teeth of increasing RBA jawboning. Melbourne is hitting its supply wall and growth slowing. Perth has spurted again but is going to slow inevitably as LNG projects pass peak spend and wind down in the wake of iron ore. The smaller capitals might do a bit better next year on investor money but not much, their metrics are mostly weak (Brisbane being the exception).
Sydney is the issue and the RBA will move to more active jawboning of that market next year followed by more consideration of macroprudential tools by year end if that doesn’t work.
The ‘boom’, such as it is, has next year to run but into increasing resistance.
When it does stall, it’s hollow underneath, with no first home buyers, and speculators galore to bolt for the exit.