Incredibly we’re almost through the first month of the year already and it may feel that some parts of the property market haven’t really kicked off yet. So here are my predictions on what we’re likely to see this year.
Currently we’re seeing a lack of stock on the market, significantly worse that at the start of 2019, as last year the market finished so strong that all stock cleared prior to Christmas, so long as price expectations were in line with the market. So we’ve entered the new year with very little stock carried over from last year.
At the same time, mortgage brokers we speak with are reporting record approvals for new buyers. The number of calls we’re receiving from buyers seeking stock is also hitting record highs as buyers see a lack of stock publically promoted so instead search for off-market supply.
Basic economics, supply vs demand dictates that with low stock levels and high demand, prices should go up. I certainly perceive that will be the case in the first couple of quarters this year.
Taking a medium term look at what may happen later in the year, I feel the property market will be linked more closely with the Australian economy. Economic growth has been slow with low wage rises and high household debt, casuing consumers to reduce spending and thus the current retail recession. If we don’t see the economy improve, housing affordability is likely to be compromised in the second half of the year which could lead to a reversal of the current positive price trend. In order to achieve growth, I feel that infrastructure spending by government and tax cuts may be required to stimulate spending.