The property analyst who correctly predicted Sydney’s house price spike in the face of criticism last year has come back with another bullish bet: more gains are coming.
Louis Christopher, the managing director of SQM Research, said the housing market recovery was far from over but would be patchy.
Last September, he said Sydney house prices would rise 15 per cent to 20 per cent in 2013-14 and 7per cent to 11 per cent nationally.
A 10 per cent gain was the widely held view of commentators. One year on, Sydney prices grew 15.6 per cent over the financial year, according to the ABS, and 10.1 per cent nationally.
Mr Christopher said prices would rise 8 per cent to 12 per cent in Sydney in 2014-15 if interest rates remain unchanged, and the economy remains steady and the dollar above US85¢.
Under the same conditions, Melbourne prices would rise 5 per cent to 9 per cent and Brisbane 5 to 8 per cent.
“It will be led by Sydney, once again . . . yet another strong period and we’re already seeing it now. Auction clearance rates are around 80 per cent, and listings representing supply and demand are at near-record lows.”
Nationally, he said prices would rise 5 to 9 per cent, which contradicts other commentary suggesting the boom is over. Growth would be less if interest rates rise because the market is still “super sensitive” to interest rate changes, he said.
“The whole recovery has been interest-rate led, if you consider the rest of the economy things aren’t exactly chugging along,” he said.
If it was not for the growth to date, Mr Christopher would have expected a further rate cut, which he said was now unlikely.
He brushed off suggestions Australia is shifting towards a housing bubble.
“The market is somewhat overvalued but not by as much as what some have very publicly stated,” he said.
“I don’t believe at this stage the market is in a bubble. Some cities are heading into overvalued territory, but the point overall is the market is far from a bubble situation when taking into account historical valuations over the past 30 years.”
Canberra prices rose 2.2 per cent over the past year and Perth 3.6 per cent. Mr Christopher expects the markets in Perth and Canberra to weaken in the year ahead.
Moody’s Investors Service said on Wednesday prime residential mortgage delinquencies have fallen for the fourth consecutive year.
Moody’s credited buoyant house prices and record-low interest rates for keeping delinquencies low.
Moody’s outlook for prime residential morgage performance for the rest of the year was stable.