We keep a constant eye on what most “experts” are forecasting for 2012, and what most are saying now is: buyers are holding tight and direct consequences of that is that prices are dropping slightly and properties are taking longer to sell. Although interest rates have been reduced and many anticipate they will fall to even lower levels, we don’t believe that these conditions will necessarily be conducive to growth in property values. Although lower interest rates improve housing affordability, we believe most will remember how quickly the Reserve Bank lifted rates coming out of the GFC and will be wary about speculating within the current housing market and a nervous market in Europe and America.
It is likely that the European Debt Crisis and ongoing economic woes in the United States will have some impact on the availability of housing credit. In addition, credit and debit card statistics also show that consumers are showing a preference for using their own money rather than the banks’. Those two trends point to buyers taking longer to save for a bigger deposit.
In the short term though, it is likely that lower interest rates for now will result in an improvement in sales turnover, but the level of seller discount should remain above average. We don’t believe values will start showing significant improvement during 2012.
Overall, we anticipate that the soft conditions are likely to persist. However, we believe conditions will be better than those in 2011 if austerity measures in Europe and the prospect of presidential elections in America have a satisfactory impact to calm down the nerves of the market.
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