Experts believe that RBA’s forecasted 30 per cent growth in property prices over the next three years will materialise in 75 per cent of Aussie regions.
According to a document released by the Reserve Bank of Australia (RBA) last Friday, following a Freedom of Information request, a permanent 1 percentage point (100 basis point reduction) cut in the official rate could increase real housing prices by 30 per cent over three years.
With the RBA clearly alert to the risks from low interest rates, property experts believe the bank’s predictions are fairly accurate.
“With what we can see today based on recent shifts in inventory levels, we would be comfortable in saying the RBA forecast will apply in 75 per cent of regions,” self-proclaimed data nerds Arjun Paliwal and Kent Lardner told Smart Property Investment.
According to their analysis of inventory level trends over the last two years, a substantial decline in stock levels is evident, creating high price pressure.
“There has been a dramatic decline in stock levels relevant to sales volumes (inventory levels). This change is creating many high pressures,” InvestorKit’s head of research, Mr Paliwal, and Suburbtrends’ Mr Lardner said.
“Most regions across Australia are seeing a decline in days on market. This is likely to flow onto prices and a reduction in vendor discounting across house markets,” they noted.
Some of the notable areas where the ‘Property Nerds’ believe the RBA’s predictions are “most likely” to materialise include NSW’s Sutherland Shire, Wollongong, Gosford, Newcastle, Wyong and Hornsby, Tasmania’s Hobart, and Burnie-Ulverstone, the ACT’s Creek, Tuggeranong and Gungahlin, Queensland’s The Hills District, and Victoria’s Mildura, Bendigo, Peninsula and Warrnambool. , Warringah,
According to the pair, regions under the “most likely” category have seen inventory levels decline by up to 49 per cent over the last two years, with a majority tipped to have less than three months of stock available.
Other regions within Adelaide, Brisbane, and regional markets such as Marion, , Onkapringa, Tea Tree Gully, Wynnum- , Sandgate, Nundah, Wagga Wagga, Ballarat and Toowoomba are “likely” to see the RBA’s predicted growth.