With the Reserve Bank signalling an improved outlook for the economy together with falling mortgage interest rates, the current, once in a decade energy of the Sydney housing market is set to continue. Other markets are also set to benefit from improved affordability from lower rates, although prices growth will be more modest.Higher retail sales, a positive trade balance from a lower dollar and rising business confidence have provided some optimism on the short-term outlook for the economy.
The key measure, however, remains the jobless rate with both New South Wales and Victoria reporting a significant loss of jobs over 2013. Interest rates will remain on hold for the foreseeable future on the proviso that the national unemployment rate remains consistently below 6 percent.2013 was the strongest year for national house price growth since 2009 with the median house price increasing by 9.8 percent.
All capital cities recorded an increase in median house prices over the calendar year for the first time in four years .Solid end of year buyer momentum in all markets will ensure a positive start to 2014 – signs of which are already emerging. Affordability constraints and likely continued subdued economic activity will, however, act to moderate prices growth through the year. Australian capital city housing markets are providing early indication that the solid to strong buyer activity that characterised most capitals through 2013 – particularly through the latter part of the year – is set to continue at least through to the middle of 2014.
Sydney and Melbourne have each recorded strong weekend auction clearance rates over February well ahead of the results recorded over the same period in 2013.Auction listings have surged over February to record late-summer levels as market confidence remains on a high.The Sydney market as yet shows no sign of slowing down from the near-record prices growth recorded over the December quarter 2013.
Low interest rates are a key ingredient to the current high levels of home buyer activity. Although the Reserve Bank unsurprisingly decided to keep official interest rates on hold at its first meeting for the year, mortgage rates continue to fall as banks increasingly compete for market share.