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While the economy is becoming more conducive to a significant upturn in property values, poor consumer sentiment is stifling potential growth, a new report has found.
Over the May quarter a healthy economy and improvement in retail spending saw small increases in residential values, found PRDnationwide’s Quarterly Economic & Property Report, yet consumer sentiment is weak, providing a drag on any significant potential improvements.
Australia is in the longest spell of growth without a recession, at 21 years, and ‘a record for any nation’, said PRDnationwide’s research director, Aaron Maskrey.
However, the last piece of the puzzle for the growth, positive sentiment, is still yet to be seen.
“All that is missing from this picture is strong consumer sentiment and buyer confidence, which is likely to return once the volatility overseas ceases,” Mr Maskrey said.
As a result, despite the large number of positive indicators, it is this global environment that will require house prices to have to wait until 2014 for an upturn.
“Australian house prices are likely to remain flat during 2012 to 2013 with a recovery expected as international economic conditions and domestic growth prospects improve,” the report states.
When positivity will come from overseas is even less certain, with prices predicted to decline over the majority of the Eurozone, with significant losses in Ireland and Spain.
Despite this stagnation and uncertainty, considerable further drops in Australia were also found to be ‘unlikely’ on the back of low unemployment, rising personal savings and strong domestic financial institutions.