House prices, which are expected to decline over the next 12 months due in part to a lack of affordable stock, should recover by June 2013, according to the National Australia Bank Quarterly Australian Residential Property Index.
“House prices in WA are expected to significantly out-perform the other states with prices rising by three per cent”, the NAB said, based on the findings from its Index. “House prices are expected to remain flat in Victoria during this period and fall slightly in Queensland (down 0.3 per cent).
The Index is based on a panel of respondents including real estate agents/managers, property developers, asset/fund managers and owners/investors.
The forecasts came as the Index reported a two per cent fall in national house prices in the June quarter, while rents rose by 1.3 per cent. House prices fell in all states, with the largest declines seen in Queensland (-3.7 per cent), SA/NT (-2.7 per cent) and Victoria (-2.4 per cent).
“House buyers continue to cite tight credit conditions as a major constraint in buying property, but concerns over rising interest rates and house price levels are also growing, suggesting that affordability is still a major issue in the housing market,” the NAB said.
Resident owner-occupiers are the number buyers of new homes, with 46 per cent of total demand, while resident investors make up the next biggest share with 28 per cent. First home buyers accounted for 17 per cent of the market, with first home buyers most active in NSW (24 per cent) and least active in Queensland (10 per cent).
“Demand for new residential developments is currently strongest for inner city low rise apartments, but there has been a notable deterioration in demand for all types of new residential property since March,” the NAB said. “Tight credit conditions are still seen as the main impediment to new residential developments, but concerns over rising interest rates are growing.”
Rents will continue to rise through to 2013, with the Index expecting a 3.1 per cent increase in the next year. The NAB said rental growth was stronger across the country, with the biggest increases recorded in SA/NT (2.4 per cent), WA (2 per cent) and NSW (1.5 per cent). Rental growth in Queensland was slowest at 0.4 per cent.