Global property values are on the rise, and with them, Australian house prices which grew 9.8% during 2013 – the fastest pace in years.
The Economist warned this weekend that the global house price rally was just a result of the easy money culture of the past few years and “monetary policy may call an end to the house-price party”.
That may be true in the US and some other jurisdictions as their economies pick up or inflation needs to be addressed.
But it’s unlikely to be monetary policy that knocks Australian housing anytime soon with the RBA widely expected keep the cash rate on hold until 2015.
As the AiG PSI showed today, Australia’s vast service sector is still contracting.
And JBWere issued a note this morning arguing for further house price gains in 2014, on top of the 2013 growth that “more than [offset] consecutive outright contractions in prices over the prior two calendar years, leaving aggregate prices +3.6% higher than the prior cyclical peak”.
So the pace of growth is good news for home owners and good news for the RBA given that the price rises have not been accompanied by a surge in growth of mortgage debt.
From the JBWere note: