"A number of measures are more positive than the 10-year average, and these are likely to be a positive for the housing market."
Spring selling season likely to be stronger this year than last, but don't expect it to power along: Cameron Kusher
In spring we begin to see uplift in listings activity with more properties available for sale and subsequently an increase in auction activity. Spring also brings an improvement in the number of property sales, especially following winter, which is usually a slow period for the housing market.
Spring 2011 delivered a somewhat disappointing selling season, with sales volumes across the combined capital cities down by 3%; lower than they were in the spring of 2010 and with no noticeable improvement from volumes in autumn. The amount of stock available for sale during this period was continually increasing throughout the period to historic high levels, and home values were falling across each capital city market.
Although economic conditions are now not as strong as they were before the financial crisis, generally most indicators are stronger than compared with this time last year.
It is also important to analyse just how the economy is tracking compared with a longer-term average (10 years) so as to achieve a better understanding of the overall state of the economy compared with what may be considered “normal” based on the decade average.
While autumn represents the period when most property sales are made, spring is traditionally the season when more properties come on the market.
Overall, we’ve seen some positive movements for home values, with new stock being added to the market lower and each of the vendor metrics (selling time, vendor discounting and auction clearance rates) all showing an improvement.
Recent economic data also supports a period of stronger conditions with higher levels of consumer sentiment as well as an increase in housing finance commitments, lower standard-variable mortgage rates, and a greater rate of population growth and an improvement in retail trade.Click to enlarge
Further, given the poor performance of the housing market over the past year, any positive changes are generally moving from a very low base, albeit in the right direction.
Despite a more positive trend for many indicators compared with those of 2011, a comparison with the longer-term trend highlights that many of these indicators are moving off a low base. Additionally, significant challenges remain in the market including:
• The high stock levels;
• Transaction volumes which are below average;
• Lower growth in private sector housing credit;
• Lower levels of consumer sentiment;
• Lower numbers of owner occupier commitments for new loans;
• First-home buyer activity, which is well below average, and lower levels of full-time job creation.
These factors are likely to impact on the overall housing market performance coming in to this spring.
On the other hand, a number of measures are more positive than the 10-year average, and these are likely to be a positive for the housing market. These measures range from a lower number of new property listings entering the market and other measures such as inflation, which is well below average levels, below average standard variable mortgage rates, higher levels of annual population growth and a greater annual increase in retail trade.
Overall, the data indicates that generally the housing market is now in a stronger position than it was 12 months ago. Considering this, the spring selling season should be stronger this year than it was last year however, in comparison to recent years we would not expect the housing market to power along through spring in the manner that it has previously.Cameron Kusher is senior research analyst at RP Data.