Discount rates
Housing Minister Sukkar said this week advised first homebuyers they should take the chance to get into the market as housing prices are now likely to rise.
The government is introducing a first home loan deposit scheme, though it's not effective until 1 January.
Decisions should as always be assessed on a case by case basis, though, and many would be understandably hesitant to look at new apartments right now.
Markets, meanwhile, are now expecting the cash rate to average less than 1 per cent for the next half decade.
Fair value uplift
Discounted cashflow analysis seldom (i.e. never) throws out good numbers for capital city housing in Australia.
But if yields and prices follow historic patterns this unprecedented shift in the discount rate could see housing markets revalued radically higher through the coming cycle.
Discounted cashflow analysis seldom (i.e. never) throws out good numbers for capital city housing in Australia.
But if yields and prices follow historic patterns this unprecedented shift in the discount rate could see housing markets revalued radically higher through the coming cycle.
Markets had begun to price in Labor's proposed changes to negative gearing and capital gains tax before the election, but these changes were binned by the electorate.
It's always interesting to debate the minutiae of housing markets, but it's impossible to anticipate them.
The big picture is that after four or five years of tightening the credit pendulum has begun to swing back in the other direction, with half a dozen of the main lenders announcing a lower floor rate over the past week or two.
My base case is now that a rudderless Labor will lose the next election - they've removed their proposed negative gearing reforms from their now website anyway - and well-selected properties will perform handsomely over the next six years.
Any holder of a remotely positive outlook tends to be dismissed as permanently Panglossian these days, but that's not so in my case.
Before the election I co-authored a report forecasting sharp declines in housing prices as a result of prospective tax changes, but then Labor wiped out at the polls and mortgage rates were cut hard - to record lows.
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If econometric housing market models rather than gut feel are more your thing, then the below research paper (Tulip/Saunders, RBA Research Discussion Paper) puts some numbers on it.
Recall that not long ago Lowy's John Edwards projected that the RBA could hike nine or ten times over the following couple of years; whereas in the event rates have been cut and cut again, with financial markets pricing for further easing.
Some models show markets as being more sensitive still to interest rates, but remember that the real rate of interest is the key metric to watch.
