The housing market should come off the boil in the second half of this year and mortgage rates should fall, but there are some risks to that assessment according to Macquarie Bank economist Roland Randall.
Monday, March 31st 2003, 6:18PM
by The Landlord
He notes that migration, a big contributor to the housing market’s current strength, contributed a percentage point, or 38,200, to last year's 1.6% population growth and that the average annual increase in residential investment was 19%.
Randall expects migrant inflows will abate this year, but notes that February’s inflow was a record.
He also notes that the Reserve Bank’s Official Cash Rate (OCR), currently 5.75%, is 0.75 percentage point below its 10-year average, which has also contributed to housing market’s strength.
Nevertheless, because the economic outlook is weakening, the market expects the OCR will fall to 5.25% by the end of the year, "which should assist affordability and ensure that housing activity does not fall off a cliff," he says.
