Housing boom not over yet: Trass

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The housing market still has some way to go before the current boom is over, according to Kieran Trass at Hybrid Consulting.

Monday, April 5th 2004, 6:46AM

by Jenny Ruth

"I don’t see values dropping. In fact, they seem to be strengthening," Trass says, adding that he expects the next lot of figures from Quotable Value should confirm that.

Quotable Value’s latest figures showed its house price index jumped 21.9% in 2003, although it slowed to a 4.9% increase in the December quarter compared with the September quarter’s 7.3% increase.

As well, listings are increasing and sales volumes remain strong. "A lot of investors are still keen to buy, although it’s getting very difficult to buy cash-flow positive properties," he says. "At the end of a boom, there are always a lot of naïve investors who are prepared to forego cash flow for their expected capital gain."

Many property investors have only entered the market in the last couple of years and haven’t experienced a full cycle yet.

Trass says the buying frenzy that typically ends a boom hasn’t arrived yet this time either. "That frenzy is one of the signs I’m waiting for to herald the end of the boom. I expect it to come and I expect it to come this year."

Trass also has a warning for those who believe coastal property values will never fall.

"Coastal property suffers big time (after a boom). If you’ve got a rental, your own home and a beach house, which one do you think of selling first? You need somewhere to live and you’re getting income from your rental, but the beach house looks like a noose around your neck."

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