Despite rate cuts of 75bps to official interest rates, there has not yet been any increase in mortgage lending volumes, with results recently released indicating that house credit increased by only 0.3% in June, following a similar rise of 0.3% in May. These results are in line with the national trend towards saving, with housing credit having risen by only 5.1% in the 12 months to June 2012, representing the lowest increase since 1977.
The news isn’t all bad at the moment though, with ABS statistics recording that Sydney house prices increased by 1.4% for the June quarter. Managing Director of SQM Research Louis Christopher sites the reduction of stock on market in Sydney as the main reason for that driver. In contrast the Melbourne market continues to face tough times ahead due mainly to increasing levels of stock on market.
Locally the Canberra market is somewhere in between with a steady rise in stock on market present over the last 2.5 years starting to taper off and show signs of trending downwards. We believe this is due mainly to more sellers than normal holding off selling during the Winter months because of the media publicity about the declining market and fears they may not get their price.
With all that in mind we are anticipating an active Spring for the local market, and expect to see some renewed confidence with not only warmer weather and local gardens in full bloom, but we also remain hopeful of the flow on effect of past interest rate cuts starting to come through. The three potential detractors from that optimistic perspective are the winding back of the government’s home buyers concession scheme which may stall the lower end of the market for a while with first home buyer unable to raise enough cash for stamp duty, the ongoing uncertainty in Europe affecting condience on a global level and the continued heavy construction in the Gungahlin and Molonglo areas putting additional supply into an already full market.