This article is from the Australian Property Journal archive
HOUSE prices are forecast to increase by 3 to 5% in 2013, with Darwin and Perth offering the best growth prospects, according to Australian Property Monitors.
APM’s annual State of the Market Report found the national median house price rose by just under 1.0% over the 10 months to October.
Senior economist Dr Andrew Wilson said 2012 has generally been a positive year for the Australian housing market though buyer and seller confidence remains fragile.
“Overall markets have stepped forward modestly into recovery in 2012 with the prospect of this trend continuing in most capital cities.
“Although the housing market performance in 2012 has been generally positive, results have nonetheless been mixed and patchy, with buyer and seller confidence remaining fragile.
“Capital city markets have responded mainly to local demand and supply drivers although the reduction in official interest rates from 4.75% in November 2011 to 3% in December 2012 has improved housing affordability and contributed to higher levels of buyer confidence. The cut in mortgage interest rates has however been offset by significant rises in the cost of living driven particularly by tight state and national government fiscal policies and increased energy costs,” he added.
Dr Wilson said 2013 should continue to build on the modest gains of the past year, however the forthcoming federal election and the likelihood of a protracted campaign may result in some uncertainty amongst homebuyers and sellers, with confidence already low.
“Investors will continue to be active in 2013 increasingly attracted to bricks and mortar investment by historically low interest rates and the prospects of capital gains. This will again be particularly focused on Sydney, Perth and Brisbane.
“Overall markets have stepped forward modestly into recovery in 2012 with the prospect of this trend continuing through 2013 in most capital cities. However price outcomes will continue to be driven largely by localised factors with mixed results. Given a better economic performance and a sustained revival in the stockmarket, a growing sense of prosperity may be converted into increased buyer activity generally working its way into prestige housing markets,” he said.
Sydney’s house prices rose by 1.5% over the 10 months to October. The low and mid-price range markets will continue to attract solid buyer activity through 2013 particularly in the inner-west, Canterbury Bankstown and Hills suburban areas.
Investors are also set to be particularly active in the unit market as solid yields are maintained through rising rents and prices. Prestige markets will move forward only gradually through 2013 as confidence and capacity slowly returns to this market sector. Sydney houses prices should grow by between 3 and 5% through 2013.
Melbourne’s median house price edged up 0.5% over the first 10 months of 2012. Concerns over the performance of the local economy will continue to constrain the Melbourne middle market. The prestige market however is set to continue with the solid buyer momentum it has built through 2012. This activity may assist in confidence building in other market sectors. Investors and first home buyer are set to remain relatively inactive as a consequence of Australia’s least competitive capital city rental market. A looming oversupply of new apartments will continue to exacerbate relatively high vacancy rates, stagnant rental growth and falling unit prices. Melbourne house prices should increase by up to 3% in 2013.
Dr Wilson said investors will become increasingly active in the Brisbane market through 2013 driven by a tight rental market, rising rents, the highest yields of any mainland capital of 5.24% and the prospect of solid capital gains. Established inner and middle suburban housing markets will continue to attract value buyers. High listings in the outer suburbs particularly to the north will however continue to place a lid on prices growth in those regions. The inner city apartment market looks particularly promising with Hamilton and New Farm set to continue their renewal and expansion. House prices are expected to grow by up to 5% in 2013.
APM predicts Perth is set for a strong year of home buyer activity in 2013. Driven by record levels of immigration, housing shortages, steeply rising rents and one of the world’s strongest economies, Perth house prices should regain their previous peaks some time through the year.
Investors, first home buyers and change up buyers from the low to mid-price sections of the market will all be active in 2013. Perth house prices could increase by between 5 and 7% over 2013.
The news is not so jubilant for Adelaide, which is predicted to experience another subdued year with 0% growth forecast.
Confidence reflecting the impact of the electoral cycle may influence Canberra home buyers and sellers in 2013 with a Federal election due sometime during the year. Nonetheless the Canberra fundamentals remain solid enough to produce some prices revival in 2013. Canberra prices are expected to rise by up to 3%.
Hobart remains the outlier in terms of capital city housing market performance with prices down by 3% over 2012. With a subdued local economy and the consistently highest capital city unemployment rate Hobart house prices will remain flat at best through 2013.
Darwin produced another typically volatile house price result in 2012, reflecting its seasonal pattern of economic activity. However underlying buyer activity is on the rise as a consequence of a strengthening local economy generating solid jobs and incomes growth. Driven by a shortage of accommodation and a rapidly expanding resources sector Darwin house prices could increase by up to 7% in 2013.
Property Review
