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The housing market’s continual strength cannot be underestimated despite the national property market falling through its largest value loss since the 1980s, an analyst has considered.
Cameron Kusher, research analyst at CoreLogic, has noted that even considering the recent downturn in the property market, “the fact that values nationally fell by less than 10 per cent speaks to the ongoing strength of the housing market”.
Property strength “has culminated in Australia being one of the most expensive places in the world in which to buy property” over the past 40 years, he said.
Ongoing signs of market improvement have been seen since May’s federal election, according to Mr Kusher.
A number of factors outlined by the analyst included the “unexpected” win by the Coalition in the federal election, which removed uncertainty about changes in taxation policies relating to investment, and two 25 basis point cuts to interest rates.
Tax cuts for low-income earners and an easing of some of the previous lending restrictions that were in place have also had an impact, he continued.
Acknowledging the naysayers, Mr Kusher outlined how many people are pointing to the very low volume of sales in the market to indicate that market recovery is “not real or unsustainable”.
He considered that “while that could very well prove to be true if/when stock levels rise, the truth of the matter is that in a downturn, sales volumes typically fall and, subsequently, the early stages of a housing recovery are usually characterised by low volumes of sales”.
Auction volumes have certainly fallen much more than volumes in the general market; however, “as housing market conditions have softened, vendors have become much more selective about which properties are appropriate to be taken to auction”.
“Notwithstanding that, as we have seen in the past, you can’t say that an increase in dwelling values is not sustainable just because the volume of stock either selling or going to auction is low,” he said.
“Ultimately, you can only transact that which is actually available for sale, and at this point, there is not a lot of stock available for sale.
“Of course, as we enter spring that may change, and a higher volume of stock for sale may prove to snuff out any increases in housing values.
“But at this stage, the improving trend is quite real.”
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