4 things that help predict property prices

Will predicting property prices ever be as easy as falling off a log or taking candy from a baby? According to Macro Business there’s just four things you need to know that impact the way our housing prices sway.

Housing credit
This is how much Australian home buyers are loaned each month. As it changes, house prices follow - usually about six months later. Less credit available means prices go down, and vice versa. Credit is tight right now. 

Auction clearance rates
Auction clearance rates tell you how keen buyers are. If they back off, prices usually follow two months later. Once the clearance rate dips below 55%, prices really start flying south and Australia’s clearance rates recently settled at 40-45%. According to an article in Macro Business, CBA: Aussie house prices to keep falling, this reflects a weakened housing market, struggling to match the expectations of buyers and sellers.

Foreign demand
From early 2012 to mid 2017, foreign buyers seemed to be everywhere snapping up Australian property. But a lift in state government stamp duties, and China tightening up its outflow of capital, has seen this wane. When foreign investors say ‘no thanks’ and take their housing demand with them, near term price reductions will generally follow. 

People’s expectations
Monthly surveys of what people expect house prices to do are a useful indicator of annual price changes. If buyers fear prices will go up, they rush to buy, causing prices to rise. If people believe prices will go down, like now, they wait. Then prices usually drop. If you’d like to know more, or find out how I can help your clients  get a competitive home loan, call me today.