The likelihood of a property price bubble remains slim, despite some recent upward pressure on house prices, Residex founder John Edwards claims.
In his monthly analysis of property market figures, Edwards sites lower interest rates and a lack of available stock for those competing to purchase as the driving force behind the upward trend.
“In the last quarter, house and land values have increased by 0.59% on an Australian-wide basis while units have presented an increase of 1.89%.”
Edwards also notes that the growth trend apparent in most major capital cities is not uniform.
“Some capital cities produced very strong results in May and June but have reverted to a price reversal in July. For example, Sydney houses increased in value by 4.5% in May and June but have posted -0.59% growth in July.”
He doesn’t believe a housing bubble is on the cards any time soon though, claiming a more accurate statement would be that, while the market remains ‘fragile’, it looks as though it’s moving to a more normal growth phase.
“A period of excessive price growth is unlikely... We are also likely to see increases in unemployment, which will also encourage a level of conservatism within the community. Additionally, interest rates will rise from the current historical low point.”
Edwards adds that the result should be an improved spring season.
“Once the election is out of the way, we will see a more active market with the rate of price growth being dependent on the volume of stock brought to the market. We will have a better idea of this by mid-September when most agents have commenced their spring selling campaigns."
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