28 Jun 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.”