Property Forecast: Boom Or Bust?

Economist Philip Soos has been known for his Speculation Index – a property market indicator that forecasts housing performance in the country as early as the 1900’s. Based on his index, is the property trending towards a Boom or Bust?

The last 2 years have provided us with substantial data on property prices trends, with values up by 10% and around 17% in Sydney. Surprisingly, these values are predicted to rise further, as the market relies on interest rates. According to the index, the property market will continue on an upward trend until we see significant tightening in credit. Until it happens, the market is presumed to continue soaring through 2015.

Read more about this on the Property Observer website.

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Do We Have Enough Housing Supply For The Growing Population?

Housing affordability has been under fire for some time as property values continue to rise, but the Reserve Bank has pointed out housing supply and existing government policies as the major challenge in residential property ownership, as low number of properties go on sale despite increasing building approval numbers and high auction clearance rates.

Dwelling approvals have risen by 1.2% from the previous month and is 6.8% higher than the same time last year, according to the Australian Bureau of Statistics. Housing Industry Association economist Geordan Murray believes that adding supply will help resolve the issue of housing affordability, as house prices continue to rise despite producing lesser properties. Properties that were sold nationally was 5.4% lower than the previous week. Queensland was singled out as the strongest state in new building construction with a 2.7% increase in August.

Read more about this on the Property Observer website.

Falling Dollar To Benefit The Property Market

The Australian dollar fell to a six month low at US89.32 – the lowest since March, as the US dollar surged against all G10 currencies. Iron ore prices also attributed to the local currency dropped, as it fell to a five year low.

Despite the drop, economists remain optimistic, with CommSec Chief Economist Craig James stating that the AU dollar is leveling to commodity prices. Job vacancies are also on the rise and is expected to pick up as it recovers from the mining boom slowdown. Surprisingly, the property market is set to benefit from the currency drop, as prices are set to rise with the interest rate expected to remain on hold for at least another year. Forecasts from SQM Research show that if the AU dollar were to drop below US85¢, Sydney prices could increase around 8% – 12% and 5% – 9% for Brisbane and Melbourne over the next year.

Read more about this on the Sydney Morning Herald website.