Property experts are buzzing today after the latest housing finance data for November 2008 showed first home buyers are starting to re-enter the market, attracted by increases to the First Home Buyers’ grant and lower interest rates.
Property experts are buzzing today after the latest housing finance data for November 2008 showed first home buyers are starting to re-enter the market, attracted by increases to the First Home Buyers’ grant and lower interest rates.
But new data from property research firm Residex shows the property sector is in for a tough new years, with property prices expected to increase by a “very modest” rate of 3.3% a year over the next five years.
The Residex December quarter housing figures, released today, show a 0.63% decline in national housing prices for the last three months of 2008 and a 0.5% decline in unit prices.
Economists remain divided on the outlook for housing prices during 2009. Some expect prices to fall slightly as demand remains relatively strong, while others suggest higher unemployment may see falls of up to 40%.
But Residex managing director John Edwards says he is optimistic about the residential property market staging a return, assisted by Federal Government initiatives such as the increased First Home Buyers’ grant.
“You can clearly see the impact of those grants – if you look at the numbers around November, there is a dramatic slowing in the rate of decay. Every one of the interest rate adjustments, the grants, everything the RBA and Government did had the impact they were looking for.”
Edwards suggests that while these grants will only boost the market for a limited period of time, the market is on its way to recovery alongside future Government assistance.
“Unless we have a substantial increase in unemployment, which would then be followed by a reduction in immigration, I think we’re through the worst. I think [the Government] learnt and is recognising the need to ensure the housing market doesn’t get into trouble,” he says.
“Overall, it’s clear that the rate of decay has improved.”
But Edwards admits some markets are likely to struggle for some time.
“In markets like Perth, that market hasn’t turned and has further falls to come. And you definitely would want to stay away from markets like the Gold Coast. They have further adjustment to come.”
Edwards describes his five-year prediction of 3.3% annual growth as “very modest… it’s half of what you’d normally see.”
“You are never going to see the rates of capital growth that you saw because of the free flow of unlimited credit… it won’t be until society loses its memory about the issues that we’ll go back on that sort of period. We are headed to a more realistic balance.”
|
Median value ‘000 |
Value growth 2008 % |
Number sales 2008 |
Prediction |
|
| ACT | $456 | 0.8 | 4794 | 2.9 |
| Adelaide | $370 | 4.7 | 18,046 | 2.6 |
| Brisbane | $448 | 3.6 | 36,801 | 3.2 |
| Darwin | $440 | 10.4 | 1819 | 4.1 |
| Hobart | $351 | 1.9 | 1872 | 5.0 |
| Melbourne | $476 | -0.9 | 47,158 | 3.9 |
| Perth | $482 | -4.0 | 21,686 | 3.2 |
| Sydney | $561 | -4.2 | 35,857 | 5.6 |
| Australia | $394 | -0.7 | 296,320 | 3.3 |
Source: Residex
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