From Westpac Economics today comes a report arguing that Australia’s housing recovery will remain tepid and uneven:
The current recovery in Australia’s housing markets has been slow to form and despite a quickening in early 2013 remains uneven across segments and states.
We expect more of the of the same going forward. Price expectations suggest current positive momentum is well-entrenched but ‘consumer caution’ and a reluctance on the part of buyers to stretch themselves financially will remain a major ongoing restraint. Concerns around job security remain high and although lower interest are easing pressures on existing borrowers and improving affordability for those looking to enter the market, the mining investment downturn and associated labour market weakness will continue to inhibit buyers.
Overall we expect dwelling price growth of around 5% nationally in 2013 moderating to 3½% in 2014. Performances will diverge widely across capital cities though with a variety of state-specific forces at work. Sydney and Perth are expected to lead the way initially but with activity likely to wane in the west as the mining downturn gathers momentum. ‘Supply’ factors are expected to be become more of a drag in Melbourne, but are expected to diminish in Brisbane where rental markets have already tightened up rapidly. Dwelling construction will also be uneven with solid but unspectacular growth forecast nationally – an 8.9% over the two years to the end of 2014.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
