WHERE NEXT FOR HOUSE PRICES – PART 1

Feb 14, 2017
Michael Matusik

The tea leaves suggest that dwelling prices should continue to appreciate over the short-term.  Here, I am talking about the next six, to maybe, twelve months.

…so, the first half of calendar 2017 and, depending on how things play out, maybe the whole of this year.

What happens beyond 2017, well that’s a different story.

Improving confidence (and after a pretty shitty 2016, it is little wonder that many have more pep) and rising housing finance, suggest that home values should continue to improve across much of Australia.

I stress that this is only a valid viewpoint for the immediate future.

Looking further forward, the important, longer-term housing drivers do not look as rosy as the short-time pushers, like confidence and finance.

One of the major factors holding up the housing market at present – and pushing house lending higher – is the recent changes to superannuation, which have (for mine) substantially damaged confidence in Aussie Super as a long-term savings vehicle.

As a result, a lot more Australians have turned to negative gearing of dwellings.  Many older investors are now adding a second or third home to their portfolio.

And younger Australians who can’t afford to buy a house or apartment as a residence, are more able to do it as an investment because the interest and maintenance expenditure remains tax deductible.

Again, this is adding to short-term price pressure.

I stress that the bigger (longer) picture suggests a housing reset is coming.

But more on this in tomorrow’s Missive.

So, if you are buying an investment dwelling, best buy one that ticks the right boxes when it comes to Australia’s longer-term housing outlook.

Keen to hear your thoughts.

Until next time,

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Michael Matusik

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