Edwards also says movement in consumer sentiment needs to be ‘significant’ for considerable growth to occur in the housing market and that the impact of falling or increasing sentiment only manifests in housing growth numbers ‘sometime’ after a period where the change has occurred.
“Overall, while sentiment has been a major issue with respect to housing market performance recently, I am inclined to believe that this indicator is not significant enough to be a meaningful capital growth predictor of housing over the longer term.”
Furthermore, he says, affordability needs to improve further before any significant increase in capital values becomes evident.
“Interest rate reductions will help and I remain of the view that there will be further cuts later in the year. However, improved consumer sentiment and steady employment statistics released by the ABS this month suggest that the Reserve Bank won’t move to adjust rates in the near future.”
“Overall,” he says, “there is every indication that the market is improving but it has some way to go. If you are currently intending to invest or buy a new home, now is the time to start looking as downside risks are reduced.”