Latest NewsHouse Price Crash UnlikelyWednesday, 24 May 2017

Australian house prices are unlikely to fall dramatically over the next two years, according to a new study, with steady residential property prices forecast through 2011, and prices in some capital cities even tipped to show moderate growth.

According to a report by BIS Shrapnel, Residential Property Prospects, 2011 to 2014, the residential housing market, which weakened in 2010, is expected to improve from 2011/12.

BIS Shrapnel senior manager Angie Zigomanis said that economic growth is forecast to regain traction through 2011, and continue to accelerate in 2012 and 2013 as the resources boom flows through to the rest of the economy.

"Strengthening employment growth - the unemployment rate is forecast to fall below four per cent in 2013 - will also see net overseas migration inflows turn around, and the underlying demand for new dwellings begin to rise," he said.

"With new dwelling starts currently declining, the corresponding fall in completions means the underlying deficiency of dwellings nationally will increase."

Mr Zigomanis said that this would underpin the strength of residential conditions, causing rental markets to tighten and demand to pick up, particularly in those markets that have suffered in recent years.

The report forecasts Sydney, Perth and Brisbane to show the strongest price growth through to 2014.

"These markets are currently building new dwellings at well under the level of underlying demand, while price growth has also been relatively weak in these cities in recent years, causing affordability to be improved from previous lowest levels," the report said.

"With economic conditions and income growth to be strongest in Western Australia and Queensland (and to a lesser extent New South Wales), this should underpin moderate price rises averaging five to six per cent per annum in the three years to June 2014."

The report found that in 2010, the housing market was hit by a variety of factors including a fall in first home buyer numbers, softer economic conditions and interest rates hikes.

Mr Zigomanis said that the main factor that caused the dip in first home buyer demand was a "pull forward" of first-home buyers into 2009 due to the end of the federal government's first home buyer's grant.

"These movements in the property market coincided with the economy stalling due to government stimulus tapering off, and the resources boom yet to gain traction," Mr Zigomanis said in the report.

"The combination of weaker demand, a more uncertain economic outlook, weak consumer confidence and prospects of further interest rate rises has resulted in weaker house prices."

 

 

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