Houses Prices – What Next?

In a recent article, House prices ‘unlikely to dive’, a major bank has dismissed analysts’ predictions of a plunge in house prices over the next 12 months.

Macquarie Bank has been reported as saying that instead of house prices plummeting, they will instead just soften.

The article published in The Australian says that according to Macquarie, “a combination of rapid population growth, strong labour market conditions and sustainable debt suggests the Australian housing market is built on solid foundations”.

The residential market prognosis was in the bank’s September quarter general economic outlook.

It stated that interest rates would soften the market over the next year but would not trigger a dramatic price correction. The major reason given why the outlook for house prices was not as dire as many analysts predicted was the supply and demand imbalance of housing stock.

However, this housing imbalance, according to most commentators, is being counteracted by the worsening affordability of housing, leading to a stabilising of price.

This sentiment has been echoed in another recent article, Australian first-home buyers face 4.5 year savings wait to buy property.

Published on news.com.au, the article stated first home buyers now need 10 per cent more for their deposit and it was now taking nearly another year for first home buyers to enter the market.

Where previously, first home buyers saved for 3.7 years, in the latest Bankwest research it has ballooned out to 4.5 years.

Apparently, Australian couples now need “to raise $85,800 deposit for a median-priced house, compared with $78,100 a year earlier”.

This is even worse in the more expensive metropolitan areas, where the median price of a home is about $468,000, according to RP Data.