Australia’s housing market recovery is set to accelerate next year, with Sydney to experience significant price rises of between 15 and 20 per cent, according to SQM Research.
The research group’s third annual Housing Boom and Bust Report for 2014 predicts that across the capital cities there will be a rise of between seven and 11 per cent. This forecast takes into account an interest rate rise sometime between mid- and late-2014.
SQM Research reports that low interest rates and an improvement in sentiment towards the national economy will further drive buyer interest in the national housing market.
“The housing recovery that commenced in the third quarter of 2012 for most capital cities is now about to enter into a more accelerated phase from what has generally been modest price rises to date,” SQM Research managing director Louis Christopher said.
However, the results will vary from city to city.
“Canberra, for example, will record house price falls of between one to four per cent,” he said. “Melbourne will record just modest to moderate price gains of 4 to 7 per cent. Indeed, that is the range for the capital cities when you exclude Sydney.
“Sydney though is turning into a beast unto itself. We have a strong conviction that the [Australian Bureau of Statistics] will record 15 to 20 per cent house price rises next year for that city.
“Such a rise will create a large dilemma for the [Reserve Bank], especially if the national economy is still running below average growth.”