House prices and what the forecasters are saying

As always, the media is making as much noise as possible about house prices, interest rates and the economy and then there is various monthly and quarterly reports on house prices from valuers, property consultants and economists, so I’m going to try to put them altogether and bring the whole show back to Earth.

OK lets get something straight, the property market is not one market it’s many micro markets and I think this factor is one of the biggest reasons there is confusion when trying to work out what is going on in your neck of the woods.

I’ll start with the latest monthly report from HTW, the following table presents a generalised overview of the state of property markets in Capital Cities using financing risk-rating scales. They are not a guide to individual property assessments.

Click for larger view

As you will see from these tables each state has different stages, look at the stage of the property market of Darwin compared to Perth likewise the rental demand for houses in Adelaide compared to Perth.

These tables should give you a good visual that when you hear on the radio or TV or read a headline about the property market don’t thick that it applies everywhere.

Also Equally the type of homes differ eg.  Houses and Units.

My general take from HTW’s research is there are a number of factors that have come into play over the first half of this year. All the bad news from abroad, Interest rate rises and the up coming federal election have all taken part in creating uncertainty in the market. Valuers on the ground are all reporting a similar theme – more caution in commitment from prospective purchasers; longer days on market; decrease in the confidence of the local agent as to the market’s short term prospects and an overall feeling of caution.

Economist Tim Crawford from Bankwest presented at AFG’s master class recently his findings are summarized below:

Where to for the economy?

• Economy forecast to grow by 3.3% in 2010/11 (close to average).
• Investment and exports are set to be main drivers of economic growth.
• Labour market to strengthen with unemployment rate headed towards 5%.
• Impact of government fiscal stimulus to lessen.
• Markets to remain volatile i.e. recent European concerns.
• Official interest rates to push to 5%.

Also Michael Matusik from Matusik Property Insights commented at the event and his summary is much the same;

• first home buyers resting
• investor interest set to wane
• upgrading slowing
• new housing starts to drop
• full time jobs the key…
• limited price growth, maybe even a fall

The big decision – What to do with all this information, firstly everybody situation is different because different people want different things from property but it appears if your looking for a short term profit your risk is high but as most property investors will tell you property is a long term investment. Remember its time in the investment not timing the investment. Happy investing.

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4. Home loan rates to go down
5. RBA Interest Rate Announcement