Many ask me for my short-term predictions about price growth. We covered that last week.
Some ask me about sale volumes. I think that is a more pertinent question.
One of the best short-term predictors of residential sales activity is consumer confidence.
When confidence is rising – i.e., more people are optimistic than pessimistic – then more people buy their first home, upgrade or downsize or purchase an investment property.
The opposite happens when confidence falls.
Our chart this week shows that the relationship between sale volumes and confidence is a tight one.
Housing investors, rather than owner residents, seem to be affected the most when it comes to changing sentiment.
And looking forward, falling confidence of late, means that sales volumes look like they will weaken across the country into the first half of this year.