Property experts are predicting house prices will make a modest recovery during the year ahead driven by low interest rates. However, the experts warn the boom times of property are far from back.
Harley Dale, chief economist at the Housing Industry Association, told SmartCompany he expects to see “some modest growth” on buying prices in 2013.
“We will see a return to growth rather than the flat market that has been characteristic of 2012, but we won’t see any type of growth we were seeing a decade or so ago,” he says.
“In 2013 we will see a larger number of areas enjoying some growth relative to 2012. We will see some growth in Sydney and Perth this year but some further softness in Melbourne.”
Dale says he expects inner city areas close to amenities are likely to continue to be popular and may well outperform the rest of the market in 2013.
“We did see in 2012 growth in prices in regional areas that was largely but not solely related to geographical areas that are close to natural resources and you would expect key performing regional areas for prices to be those in or around [the] resources area.”
Urban Property Australia managing director Sam Tamblyn told SmartCompany he is also predicting moderate growth across the board.
“Macquarie Bank is predicting a shaving of 100 basis points on the cash rate this year and that will have a positive impact and will not allow markets to continue softening,” he says.
“Melbourne and Hobart are going to be reasonably slack this year and in terms of performance and growth you are looking at mining towns, Perth, Darwin and Brisbane and, even to a smaller extent, Sydney.”
Tamblyn says the first home buyer’s incentive scheme is still holding up the lower end of the market, while the middle market up to the $1 million mark is still performing reasonably strongly.
In terms of the prestige market with $1 million plus properties, Tamblyn says the equities market and employment levels will have a big impact.
“There are a number of major national companies that are earmarking shedding more jobs, which will have an impact in terms of sentiment,” he says.
Paul Braddick, head of property research at ANZ, says he is “cautiously optimistic” about the property market for 2013.
“That’s largely driven by the fundamentals, which have tightened significantly in terms of demand versus supply for housing, so there are very tight vacancy rates in most capital cities and that is showing up in rapidly accelerating rents,” he says.
“Fortuitously, from a timing perspective, the Reserve Bank has cut rates significantly and that has arrested the slide in prices we saw over the previous few years. We are expecting some modest uplift in growth on the expectation of further rate cuts from the RBA.”
Braddick says an extended period of very low interest rates will bolster the market over the course of 2013.