After two years of price declines in 2010 and 2011, new data coming out today suggests the fundamentals are beginning to favour an improvement in residential market conditions.
According to a new report by BIS Shrapnel, Residential Property Prospects 2012 -2015, properties located in the resource rich states of New South Wales, Northern Territory, Queensland and Western Australia will see price increases over the coming few years.
BIS Shrapnel senior manager and study author, Angie Zigomanis, said purchasers in the main centres of these states will nevertheless continue to remain shy through to the end of 2012 due to concerns about the direction of the global and local economy, as well as their employment prospects - despite evidence of a pickup in key market indicators such as vacancy rates and rental growth now coming through.
“The recovery is expected to eventually gain traction through 2013 as continued growth in resource investment spending eventually flows through to other sectors of the economy,” Mr Zigomanis said.
“With the local economic and employment outlook becoming more positive, and some stabilisation and improvement overseas, purchasers are forecast to wade back into the market in greater numbers, translating to greater sales volumes and a pickup in price growth over 2013/14 and into 2014/15.”
In contrast, conditions in the other non-resource states are forecast to continue to be tough. These states all had the strongest bounce in construction after the Global Financial Crisis (GFC), with the result being an erosion of their dwelling deficiency and/or an emerging excess of dwelling stock.
“Economically, these states are also underperforming due to a fall off in construction and a negative impact to industry from the high Australian dollar,” Mr Zigomanis said.
“The improvement in affordability from lower interest rates may stabilise house prices in this environment. However, without any supply pressures, median house prices in Melbourne, Adelaide, Hobart and Canberra are forecast to show little change and decline in real terms over the next three years.”