Property Market Update
National Overview
• The Westpac Melbourne Institute Index of Consumer Sentiment increased by 1.9% in November, from 94.8 in October to 96.6 in November.
• Following major data revisions from the Australian Bureau of Statistics, the October unemployment rate was revised up from 6.0% to 6.2%. Previous assessments that the unemployment rate may have stabilised around 6% have had to be reconsidered. The unemployment rate reached an all time high in December 1992 (11.1%) and a record low of 4.0% in February 2008. The long term average unemployment rate in Australia is 7.0%.
• The unemployment revision is likely to have impacted the Westpac-Melbourne Unemployment Expectations Index. The Index increased by 2.7% in November, indicating that respondents are more pessimistic about the labour market. The result is particularly disappointing given that it followed a promising fall of 3.9% in October. This Index is now 5.5% above its level of a year ago and 17.2% above its level of three years ago when the Reserve Bank started its most recent cycle of rate cuts.
• Growth in the Sydney market over the last 12 months was significantly higher than any other capital city in Australia, at 16.83%. Melbourne recorded the second highest level of growth with values increasing by 8.85%.
• Unaffordability has now reached a level where first home buyers are largely excluded from the market, and the main central dwelling areas of capital cities are become the “home” of investors.
• The resource state capital cities – Brisbane and Perth, are following a similar pattern to Sydney however their growth cycles have been small and these assets are producing growth that contradicts the hype around a property ‘boom’ or ‘bubble’.
• Australia-wide predictions over the next 5 years is 4% for houses and 2% for units, which is lower than the average growth rates achieved over the last 20 years.
• Lower rates of growth are a function of our markets becoming more unaffordable.
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