Employment, consumer sentiment and first home buyer numbers are the key indicators to watch in Victoria during 2014, with the fate of the market dependant on improvements in each of these areas.
Real Estate Institute of Victoria CEO Enzo Raimondo said he was optimistic about the state’s property market, but suggested keeping an eye on a number of indicators.
“Overall, the outlook for 2014 remains positive,” he said. “However, there are warning signs, with the number of first-time buyers in the market falling, economic clouds on the horizon and the federal government having revised downwards GDP growth figures.
“Macroeconomic factors may impinge on the performance of the property market next year, with growth in the second half likely to be more moderate.”
Chief economist of Australian Property Monitors Dr Andrew Wilson agreed, claiming he expects things to worsen before they get better.
“I would expect to see growth gradually increase after a period of decline, but we need to be careful to watch where the Victorian economy is going," he said.
“The unemployment rate is over six per cent and rising, and that will be an impediment to property purchases. The grants for established houses were also removed last year, so first home buyers appear to be sitting on their hands.”
According to Dr Wilson, the comparatively affordable rental market allows homebuyers to stay in the rental market for much longer than Sydney buyers.
Mr Raimondo agreed that employment was a major player in the property market.
“Unemployment levels are a concern, particularly with the potentially damaging impact of the withdrawal of Holden looming and uncertainty over the future of manufacturing generally," he said.
“The latest unemployment figures showed a seasonally adjusted increase in unemployment by 8,000 people and a decrease in employment by 22,600 people in December, and a seasonally adjusted increase in the unemployment rate of 0.1 per cent, taking it to 5.8 per cent.
“We anticipate that the improvements in the national property market seen in 2013 will continue into this year, but caution should be exercised when predicting sustained strong growth, with consumer sentiment declining in the final month of 2013 and employment uncertainty set to continue.”