There has been no material slowdown yet for Sydney, even while clearance rates have fallen. That is perfectly normal for this time of year.
Melbourne is still patchy, though we note the moderate fall in vacancy rates this this year which was a surprise.
Right now, the weakest capital city market according to our numbers is Darwin. You can see via this chart on vacancy rates exactly what I mean by this. Indeed, I recommend you click on each chart we have for Darwin because there appears to be weakness everywhere right now.
Darwin is a classic example of what I call a ‘shallow’ housing market. But that I mean there is not a lot of market volume and depth and therefore, prices can rapidly swing one way or the other. Right now its swinging south, primarily due to the commodities downturn.
On the other hand we have the Hobart housing market. Yes, I understand that it has historically been a weak economy, has experienced weak to negative population growth and subsequently, a weak housing market.
Overall the outlook for 2015 will be reasonably positive for the markets, depending on where you are. The two “X factors” I see include interest rates and any possible lending restrictions prescribed by the Australian Prudential Regulation Authority (APRA).
So far, the pronouncements from APRA made earlier this year, have amounted to no more than jawboning. They appear to have flagged further action but if and when that comes remains to be seen.
A look at what the money market are pricing in terms of rate cuts, is revealing -
Basically the markets think it’s a dead set certainty rates are going to be cut by April 2015 with the chances increasing of another rate cut in June to take the cash rate to two per cent.
If such rate cuts happen, housing markets will be boosted throughout the course of the calendar year with most cities recording growth at the top end of our forecast ranges.
A rate cut would also lower the Australian dollar, thereby stimulating local tourism economies and their respective housing markets. Surely that would force APRA’s hand. Right now we are unsure of the magnitude they would place in curbing investment lending.