Market is trending upwards
Housing finance figures clearly show that activity is on the rise among both first-home buyers and market veterans – with prices tipped to follow
THE month of July saw another round of better than expected Australian Bureau of Statistics (ABS) housing finance results, especially considering that during the last decade, there has typically been lacklustre activity in the amount of residential dwellings financed during that month.
Non first-home buyer (nonFHB) activity in Queensland was up 10.6 per cent across July 2013 to nearly 9000 dwellings financed, and even first-home buyer (FHB) activity was up 7 per cent to 1,138. And while the REIQ estimated investor dwellings financed were down 4.5 per cent to 4408, historically a July downturn is much more pronounced.
It can be easy to get lost when looking at long-term monthly data that is subject to seasonality. However, looking at the January and July markers for 2013, compared to 2012, there has been a definite increase in housing finance activity, especially in the nonFHB segment, which accounts for about 60 per cent of the overall property market.
It’s no surprise then that in the recently published REIQ Queensland Market Monitor (QMM) for the June quarter, we saw an increase in preliminary house sales of about 22 per cent, compared to the March quarter in 2013, and an increase of 40 per cent compared to the June quarter in 2012 for Queensland overall.
Now, although analysis about the effect of federal elections has been mostly focused on negative impacts, what’s more important for the Queensland market is this increased housing finance and underlying sales activity.
We are certainly seeing the effect of the three cash rate cuts since December last year take shape in recent periods, with owner-occupiers finally seizing upon the better perceptions about property that have been building since last year.
However, if history shows anything, it’s that price growth ultimately follows sales growth.
In the recent QMM, the 12 months to June 2013 yearly results saw Brisbane and Gold Coast post median house price increases of 3 per cent and 3.1 per cent respectively, which has not been seen for some years. Then again, we haven’t seen sales growth during the past 12 months like this for some years either.
Back to the July ABS housing finance results, with the federal election in mind at that point in time – and not to mention that final Labor leadership challenge on June 26 – you’d expect a significant negative fall in these July figures, however, this clearly was not the case.
Looking ahead to the August data, however, we would expect to see some decline in activity overall, given the start of the month saw the “official” election campaign period finally get under way.
But in the grand scheme of things, the election appears to potentially have been a mere pothole along the muchanticipated road to recovery for the Queensland property market.”