The housing market is up and running in 2013 with increased buyer activity and seller confidence
Australia’s housing markets have started 2013 encouragingly with solid indications of rising buyer activity and increased confidence from sellers. The revival of Australia’s housing markets in 2012 has been confirmed as leading indicators such as auction clearance rates point to a market heating up. Historically low interest rates are the fuel to this emerging fire which is no real surprise given the typical impact of low mortgage rates on buyer activity in previous housing growth cycles. The sharemarket is also a solid leading indicator of housing market activity, particularly in relation to prestige properties. With the All Ordinaries now holding above 5,000 for the first time in three years, a rising bull market will activate prestige markets that are finally showing early signs of emerging from a sustained period in the doldrums. The international economic outlook continues to brighten, with a gradual recovery still on track in the US. US housing markets are finally showing signs of life which is another positive indication that growth is set to be sustained in the world’s largest economy. China’s high growth is also holding firm and iron prices are at record levels, which is heartening news for Australia’s resource exporting economy. Local economic performance remains the key to a sustained housing market recovery and the outlook remains positive for most capitals. Interest rate policy may present an ongoing conundrum to the Reserve Bank which will be watching carefully for signs of the usual repeat of a prices breakout in the housing market. These will be offset by concerns over lingering weakness in some sectors of the economy. For now rates are set to stay on hold over the near term, but the economic climate remains fluid, although optimism is rising.