Of course, the city by city and region by region differences were clear, but the basic trend in house prices across most areas was down. Ode’s “no holds barred” economist Stephen Koukoulas saw the decline coming. In 2017 he wrote: “Consumers are under some threat by the fall in house prices which is underway”. He added: “it is also quite clear that housing construction is cooling. This is not good news”. And so it turned out with the housing sector diving and the economy experiencing one of its weakest episodes in two decades. He was the only economist in the influential Bloomberg survey to forecast cuts in official interest rates and his insights into how the housing market and the economy more generally keep him at the forefront of the economic debate.
Stephen also was remarkably astute to predict the timing of the current upswing saying in January 2019: “Late 2019 will be the likely trough in house prices as easier monetary policy unfolds, there is a step up from previously frozen out first home buyers and the strength in demographic demand are all likely to put a floor under prices.”. Lo and behold, house prices have found a floor in the September quarter 2019 and look like lifting over the remainder of the year and into 2020. The housing market is pivotal to the overall performance of the Australian economy. Sure, it’s not the only thing that matters for the Australian economy, but it does drive changes in household wealth, consumer spending, official interest rates and the level of the Australian dollar.
So what does Stephen think now?
Stephen’s views on the outlook for housing incorporates affordability – house prices of course, but also income growth and the mortgage interest rates – then he looks at supply (new construction) and demand (driven by demographics especially population growth), tax issues, rental vacancy rates and rental yields, to incorporate potential demand from investors. These factors feed directly into his views on housing activity, including house prices.
The 10 big housing questions for now and 2020
- How robust is the rebound in house prices?
- Which cities will do best?
- Which will lag?
- How affordable are houses in an era of weak wages growth, high deposits and low-interest rates?
- How much more will new construction fall?
- Will credit conditions be tightened if prices rise to fast?
- What of the Reserve Bank and official interest rates – how will it react to the house price rebound?
- Is it a good time to buy?
- What does it mean for the overall economy?
- What can go wrong and is the talk of a recession merely headline-grabbing exaggeration or something that needs to be considered?
If you are in the property, finance and investment business, it is time to get Stephen to your event. His record in analysing, forecasting and explaining the housing market is why he is such a sort after speaker and media commentator.