People’s Choice Credit Union (PCCU), Australia’s third largest credit union has an optimistic outlook on the Australian property market. It has pointed to strong underlying economic growth, historically low interest rates and high migration levels as supporting house price growth. On a three-year view (to 2021), PCCU is predicting that Sydney and Melbourne house prices will be flat, and there won’t be ‘substantial falls of between 10 to 20 per cent that some players have been predicting’. This provides a contrary view to those held by the majority of the market.
Furthermore, PCCU is not expecting any short-term changes to RBA cash rate and hence interest rates to hold constant. Even through the greater rigorous approach to home loan serviceability and tightening lending practises. PCCU has seen home loan growth increase by 6 per cent in the first few months of 2018-2019.
This shows that lending is still increasing in some areas of the market, borrows are still taking out loans to purchase property and hence providing some strength to the housing market. This means that even though housing prices are slowing, there are many factors at play which are resulting in the flat growth rates.
On a positive note, PCCU believes that the Adelaide housing market is likely to make small gains across the next 3 years.