The Australian housing market has started the year on a solid note with national home prices up 1.6% over the first three months according to CoreLogic. We had thought the drag of high mortgage rates would get the upper hand again, but the supply shortfall is continuing to dominate.
Key points:
The Australian housing market remains far more complicated than optimists and doomsters portray it to be.
Australian housing is expensive and highly indebted; but it’s very diverse; mortgage arrears remain low; interest rates still matter; but it’s been chronically undersupplied for years; forecasting home prices is very hard; and housing has similar long-term investment returns to shares.
The surge in immigration is estimated to push the housing shortfall to around 200,000 dwellings this financial year.
Price gains are expected to be around 5% this year with high rates dragging but the supply shortfall supporting prices. The risks are finely balanced.
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