Where is the housing market now - 19/02/09 - The economists and commentators were surprised at the increase in new home buyers recorded in December. Loan approvals were up by 6.4% over November. We were not at all surprised, in fact we predict that the January stats when they are released in a few weeks will be an even bigger surprise, with large numbers of new home buyers coming into the market. February so far is also very buoyant, and may be our best month for some years. Clients across Victoria, NSW, ACT, and QLD are reporting strong buying competition for housing in the below $400,000 price range. This will shore up the bottom of the market, and although we expect to see some price easing in the medium price range, and even greater easing in the high end. we don't expect median prices to fall in blue collar/middle class suburbs close to transport, jobs, and amenities. We do expect to see a soft market on the Gold Coast and significant falls in areas that experienced illogical gains such as WA and small mining towns in Qld.

With the resources boom coming to an end the demand for housing in mining towns will fall away and many previously lucrative housing investments will become liabilities.

Where should we buy houses? - Stay away from small low population country areas, holiday home areas, and other "discretionary real estate" spending for now as further falls are expected, but capital and major regionals should fair quite well. Also be careful in centres such as Townsville and to some degree Cairns as ex Storm Financial clients drop houses to repay margin calls. If you are interested in these more negative areas, the bonus is that at some point in 2009 very good buys will be available for anyone needing housing in those areas, or for anyone willing and able to sit out the downturn. Otherwise we are slightly bullish on housing, but don't expect a boom, just a firm market in the right areas. With a generous First Homebuyers Grant, low interest rates, and in some states low or nil$ stamp duty rates up to $500,000 the home loan affordability equation has tipped in favour of the first home buyer.