Fundamentals favour an improvement in the residential market, according to BIS Shrapnel - but not in Victoria, South Australia, Tasmania or the ACT.
BIS Shrapnel’s Residential property prospects, 2012 to 2015 report says New South Wales, Western Australia, Queensland and the Northern Territory are beginning to show signs of recovery.
Recovery in New South Wales is being driven by an existing dwelling deficiency.
In Western Australia, Queensland and the Northern Territory the resources boom has seen accelerated population growth, coupled with weak dwelling commencements, create a shortage.
Angie Zigomanis, BIS Shrapnel senior manager, says a market recovery is expected to gain traction through 2013, as continued growth in resource investment spending extends to other sectors of the economy.
“With the local economic and employment outlook becoming more positive, and some stabilisation and improvement overseas, purchasers are forecast to wade back into the market in greater numbers, translating to greater sales volumes and a pickup in price growth over 2013/14 and into 2014/15,” Zigomanis says.
Conditions in Victoria, South Australia, Tasmania and the Australian Capital Territory are forecast to ‘continue to be tough’. BIS Shrapnel says these states had the strongest ‘bounce’ in construction post-GFC, which has resulted in an emergence of excess stock.
“Without any supply pressures, median house prices in Melbourne, Adelaide, Hobart and Canberra are forecast to show little change and [will] decline in real terms over the next three years,” Zigomanis says.
The report says falls in house prices over 2010 and 2011 were due to a decline in first home buyer demand, variable interest rate increases, waning economic growth and slowed population growth.
Zigomanis says these negatives are beginning to turn around: with loans to first home buyers in the nine months to March 2012 up 24 percent in Queensland, and 25 percent in Western Australia, over the same period last year.
“The 100 basis point reduction in variable interest rates in 2011/12, together with house price declines, have seen affordability improve substantially,” Zigomanis says.
Forecast median house price by capital city:
||Median House Price as at June 2012 Estimate ($'000)
||Forecast Median House Price as at June 2015 ($'000)
||Forecast Gain in Median House Price Over Three Years to June 2015 (%)|
Source: BIS Shrapnel