Financial markets have pushed expectations for a cash rate hike out to early 2019, which would imply that mortgage rates aren’t likely to rise materially over the foreseeable future.
This is great news for home owners and potential home buyers across the country. The fact is, household debt is already sitting at record highs and higher mortgage rates would test already stretched household balance sheets.
Low interest rates should help to keep some heat in the property market. Across the country, we should see most markets record growth in property values. That said, this growth is likely to be subdued in comparison to what we’ve seen in recent years, especially in markets like Sydney and Melbourne.
Detached and semi-detached properties are likely to outperform units over the next 12 months. There is a distinct lack of detached and semi-detached stock in the market and, as such, demand for this type of property is outstripping supply.
On the other hand, the future prosperity of the high-rise unit sector is less certain. New unit projects that are positively differentiated and/or more geared towards owner occupier target markets rather than pure investment grade stock are likely to show a better performance.
The CoreLogic Settlement Risk Report continues to show that Brisbane’s inner city is facing the largest potential uplift in unit stock over the next two years, with some precincts facing the possibility of a 40-50% increase in total unit stock within 24 months.
Overall, performance across Australia’s housing market will remain as diverse as ever.
Tim Lawless, Head of Research, CoreLogic RP Data