The housing market was in full recovery mode throughout 2016. High demand, a later than anticipated influx of new housing stock and falling interest rates dictated market performance. Interest rate cuts in May and August added momentum to an already fuelled market. Towards the end of the year two key events could have motivated buyers to act. Banks started to move rates in the opposite direction to the Reserve Bank of Australia and the speculation surrounding the RBA’s next rate move.
Taking other key economic indicators into consideration, higher rates will not necessarily take heat out of the housing market. Our economy is making solid improvements. Prospects in the labour market look brighter. The latest ABS unemployment figure is 3.7 per cent, the second lowest of the jurisdictions. Over the past 12 months 4300 jobs were created, three-quarters being full-time positions. This is more than double the national growth rate.
The population currently sits at an estimated 396,141, as of June-end 2016. Population growth is lower than forecasted in the 2016-17 budget. However the previous consecutive quarters recorded a positive gain to interstate migration. The government’s hiring freeze lift will have contributed to this improvement. In the current low interest rate environment and considering rental prices have moved higher it is becoming a more attractive option for those relocating to purchase than lease.
Business and housing expenditure is strong. Owner-occupied housing finance increased by 3.1 per cent to 11370 loans approved over the first 11 months of 2016. The region’s Real Gross State Product grew by 3.4 per cent to $36,225 million. This advance is above the forecasted 2016 Pre-Election Budget Update, almost double the previous financial year and above the 10-year average. The construction sector did contribute to this rate of growth. The latest building approvals indicate that construction will continue to be a large driver in our economy.
It appears our market is brimming with confidence. The tone of buyer sentiment will be set this year by the 2017-18 Federal Budget and whether the banks will continue to push rates up irrespective of the RBA’s decision.