Forecasts that the sky is set to fall on Australia’s property market are difficult to justify, according to the real estate giant.
Angus Raine, executive chairman of Raine & Horne, said current demand for property, auction clearance rates and market depth do not indicate a major market correction is on the horizon.
Mr Raine believes the odds are shortening for the Reserve Bank to cut the cash rate given the state of the economies in Queensland, Western Australia and South Australia, and this could underpin real estate market activity nationally.
“There are mining communities hurting in Queensland and Western Australia, while the loss of car manufacturing and oil and gas industry jobs won't help the situation in South Australia,” he said.
“If we didn't have the housing boom in NSW and Victoria, it’s a fair bet that Australia’s largest provincial economies would be struggling too.
“With these economic issues in mind, another interest rate cut by the RBA in the first quarter of 2016 is a possibility, and would give the real estate cycles around the country longer tails that will extend well into next year.”
Hugh Macfarlan, principal of Raine & Horne’s Chatswood/Willoughby franchise, agrees that a dramatic drop in real estate prices would be inconsistent with current real estate fundamentals.
“All the factors that have underpinned the current property cycle are still in place. We have historically low interest rates with the prospect of more to come, a highly volatile share market, along with strong demand for real estate from local and overseas buyers, investors and self-managed super funds,” he said.
“There was a house sold at auction in Chatswood last weekend for $6.055 million, which is a record for the suburb. There is just nothing to suggest that we’re in for a major price correction – rather we believe values will continue to grow, but probably at a less dramatic pace.”
Michelle Mackay, co-principal of Raine & Horne Bathurst, said a market correction was improbable in her area, with values growing by 7.5 per cent in 2015.
“We are out of residential land and long lists of owner-occupiers are either missing out or are being forced to pay a bit more,” she said.
“Blocks of land in Bathurst worth $160,000 are in some cases changing hands for as much as $190,000. This doesn’t sound like a property correction to me.”