This article is from the Australian Property Journal archive
SYDNEY's house prices will continue to increase at a faster rate than other capital cities in the year ahead, particularly in the mid range market where it is forecast to jump by 10%.
According to the Domain Group`s Autumn 2015 State of the Market Report, Sydney is poised to retain its position as the leading performer with house price growth of 7%-10% in 2015, outstripping the national projection of 5%, which slightly lower than 7.4% recorded over 2014.
Domain Group senior economist Dr Andrew Wilson said the February cut in interest rates, although not providing significant improvement to affordability, has nonetheless impacted buyer confidence and reinforced underlying market dynamics.
“Lower interest rates will also continue to attract investors, particularly to the strong Sydney market with low and falling deposit rates reinforcing the attraction of bricks and mortar investment. Sydney’s resilience is largely driven by its property shortages and economy, however investor activity remains at record levels and this is another key driver of the price growth being seen.
“The Sydney housing market has commenced 2015 strongly with record level auction clearance rates for the late summer season. Robust buyer activity in Sydney is encompassing all price ranges and suburban regions. First home buyer activity, however, remains at near record low levels as a proportion of market share,”
“The prestige market revived over 2014 and although prices growth was below other market sectors, the increase in volumes and the prospect of a higher share market through 2015 will continue to activate buyers and restore confidence in this sector.
“Sydney’s median house price increased by 14% over 2014, a similar result to the 15.4% recorded over 2013. Sydney is on track to record prices growth of between 7 and 10% over 2015, which will again be the best result of all capital cities,” Wilson forecast.
Sydney`s midrange market ($800k-$2m) is expected to be the star performer with 10% growth, followed by the budget (up to $800k) with 8%. The prestige market (over $2 million) is forecast to rise by 5%.
The report said Brisbane will be the next best performer as its housing market revival continues.
Wilson said buyer activity will remain robust in mid to upper price ranges with the budget market improving with recent early signs of an upturn in the local economy.
“Brisbane median house prices are set for another solid result through 2015, rising again by between 5 and 7%, which will likely be only behind Sydney in terms of capital city performance,”
Meanwhile Melbourne, Adelaide and Hobart are in for another positive year, with moderate growth of between 3%-5% likely. Meanwhile, declining local economies spell fairly modest growth of around 2% for Darwin, Canberra and Perth.
Wilson said Melbourne started the year in solid to strong fashion with activity in the local auction market clearly tracking ahead of the weaker results recorded over late spring and early summer in 2014.
He added that Melbourne’s mid and upper price ranges, and eastern suburban regions in particular, were the best performers in 2014.
“These sectors are expected to continue to prove resilient through 2015 as aspirational buyers remain active. Lower interest rates through 2015 will offset weakening economic activity although budget priced outer suburban markets are likely to remain subdued. The prospect of a stronger stock market through 2015 will continue to activate prestige buyers. This market sector reported a solid 2014,”
Overall, Melbourne house prices are set to record similar growth in 2015 compared to 2014. The prospects for a solid autumn season and a moderate spring season continue to be dependent on a stable and improving economic environment.
The Melbourne median house price will increase by between 3%-5% over 2015 with the autumn season likely to produce the best results. The middle sector ($550k-$1.3m) is expected to be the top performer with 6% growth, followed by prestige (over $1.3m) with 4% and budget (under $550k) of 2%.
Australian Property Journal
