Australian Property Market Outlook

The Housing Industry Association (HIA) in Australia published its short term forecasts for the residential property market down under earlier this month; and worldwide reports of the market being over priced, out of control and heading for a crash are completely inaccurate it seems.

The Housing Industry Association (HIA) in Australia published its short term forecasts for the residential property market down under earlier this month; and worldwide reports of the market being over priced, out of control and heading for a crash are completely inaccurate it seems.

The HIA are expert in the analysis and forecasting of Australia’s housing industry and their latest findings reveal that the residential property market in Australia is set for an orderly short term slowdown until 2006 - 2007 when it is predicted that the market will once again revive.

According to the body’s senior economist the reports of a house price crash and subsequent major correction in the residential property market in Australia are inaccurate and unfounded.  Such reports were built on the back of 2005’s first quarter interest rate rise which saw a wobble in the market as consumer confidence was knocked.

The rise in interest rates did not lead to a rise in unemployment however; the jobs market in Australia is strong with unemployment numbers at record lows for the past decade.  This fact has since revived consumer confidence which in turn led to an upward correction in the retail industry and halted the need for further interest rate increases. 

The Australian Housing Industry Association predict that the slowdown in the residential property market will continue throughout 2005 with housing starts down 12% to year end 2005 and down a further 4% to year end 2006 at which point, baring major external negative influence which cannot be predicted, the market should begin to turn in 2007.

Moving on to examine renovation market activity, the HIA’s senior economist highlighted the fact that the market has peaked already and is now progressing at sustainable and comfortable levels of around 6%.

Overall, it is reported that property prices across the whole of Australia will stabilise and certain areas where prices have surged ahead will see a slight correction with prices falling moderately.  There will be little room for capital growth for investors for the short term but, as mentioned, baring major external shocks the market will remain strong and stable.  After the short term stabilisation and subsequent slow down it is predicted that the Australian property market outlook will return to favourable from 2007.