Well we did it everyone. We made it through another Federal Election. And a special congrats to everyone who got through numbering their Senate ballots without messing up once. Since the start of the year there has been a lot of talk about the election and how it would adversely affect the residential property market. But to be honest there’s been no solid evidence of this so far, especially if you’ve been reading this blog and keeping an eye on the Sydney and Melbourne auction markets. In any case, let’s take a look at this further in this month’s ABS stats update.
The month of July saw another round of better than expected housing finance results , especially considering the fact that over the last decade there has typically been lacklustre activity (usually a fall) in the amount of residential dwellings financed during this month (and for that matter over the past June quarter).
Non-First Home Buyer (non-FHB) activity is up 10.6 per cent over July 2013 to 8,963 dwellings financed, and even First Home Buyer (FHB) activity is up 7 per cent to 1,138. And while REIQ estimated investor dwellings financed is down 4.5 per cent to 4,408, historically a July downturn is typically much worse.
It’s easy to get lost when looking at long-term monthly data that is subject to seasonality. However for some context, the following graph includes markers at the January and July points of each year. Looking at the markers for 2013 compared to 2012, there has been a definite increase in housing finance activity, especially the non-FHB segment (which accounts for about 60 per cent of the overall market). It’s no surprise then that in the recently published Queensland Market Monitor we saw for the June quarter 13 an increase in preliminary house sales of 22 per cent compared to the March quarter 13, and an increase of 40 per cent compared to the June quarter 12 for Qld overall.
Now although analysis about the “effect of Federal Elections“ has been mostly focused on (negative) price changes, what’s more important for the Qld market anyway is this increased housing finance (and underlying sales activity). There’s no denying we’re seeing the full effects of the two cash rate cuts during the December quarter 2012 take shape in recent periods, with owner-occupiers finally seizing upon their better perceptions about property that has been building up since last year.
However if history shows anything, it’s that price growth ultimately follows sales growth anyway. In the recent QMM, the 12 months to June 2013 yearly results saw Brisbane and Gold Coast post increases of 3.0 per cent and 3.1 per cent respectively, which has not been seen for some years. Then again, we haven’t seen sales growth over the past 12 months like this for some years either.
Back to the July housing finance results, with the election in mind (and not to mention that final Labor leadership challenge on June 26), you’d expect a significant negative fall in these July figures however this clearly was not the case. Looking ahead to August though, I’d fully expect to see a marked decline in activity overall, given the start of the month saw the “official” election campaign period get under way. But in the grand scheme of things, the Federal Election is looking to only represent a mere pothole along the road to recovery for the Queensland property market.