Aqua Wealth | Two tiered house prices to hit Melbourne
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Two tiered house prices to hit Melbourne

Two tiered house prices to hit Melbourne

HOUSE prices will mirror Australia’s two-speed economy as a two-tiered  property market develops over the next three years, a leading forecaster  says.

Home owners and investors in New South Wales and resource-rich Western  Australia, Queensland and the Northern Territory will benefit from above  inflation price growth but in other parts of the country they will ”fall in  real terms,” economists BIS Shrapnel said.

A BIS Shrapnel report Residential Property Prospects, 2012 to 2015  predicts a recovery in those states that will ”gain traction through 2013” as  resource investment flows through to other sectors of the economy.

By contrast, conditions in the other non-resource states (Victoria, South  Australia, Tasmania and Australian Capital Territory) would continue to be  tough. “Median house price growth in Melbourne is forecast to be minimal. After  accounting for inflation, prices are actually forecast to fall by 6 per cent in  real terms,” it said.

The stars were ”beginning to align for New South Wales” where weak dwelling  commencements, population growth and improved affordability from interest rate  cuts heralded growth, the report said.

”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. While overseas economic conditions are expected to remain  challenging, improving local economic conditions should move to the forefront of  people’s minds and begin to have a more substantial impact on purchaser  sentiment,” the report’s author Angie Zigomanis said.

The bullish prediction comes at a time when property values in capital cities  across Australia slumped by 1.4 per cent in May and by more than 5 per cent over  the year.

It follows Reserve Bank governor Glenn Stevens’ comments earlier this month  suggesting he did not expect ”persistent strong increases” in asset values to  ”re-emerge any time soon.”

Auction clearance rates and housing finance approvals were also showing no  sign of getting better, SQM Research director Louis Christopher said.

”The market is largely in the doldrums.”

Clearance rates – the number of homes sold at auction – remain persistently  low, below 60 per cent in Sydney and Melbourne for the past few months.

But conditions over the next three years would be strongest in what, until  now, had been Australia’s two weakest markets, Perth and Brisbane, the report  said.

”We’re talking about real growth of 3 per cent per annum in Sydney and maybe  a shade more than that in Perth,” BIS Shrapnel director Robert Mellor said.

”Investors will start to return to the market when they see stable to modest  house prices and the continuation of strong rental growth. The missing  ingredient remains confidence.”

[blue] Read more: http://www.smh.com.au/business/property/twotiered-house-prices-predicted-to-hit-melbourne-20120624-20wep.html#ixzz1yssAtsKi [/blue]

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