Capitals to see strong price growth, predicts report
The Australian residential house market will continue to see growth over the next two years, according to a new report from economic forecaster BIS Shrapnel.
The Residential Property Prospects, 2014 to 2017 report reveals that low interest rates have been supporting buyer activity in a number of capital cities, no doubt music to the ears of any first time buyer. The low interest rates are a result of the historically low cash rate of 2.5 per cent, established by the Reserve Bank of Australia last August, and held steady now for 10 consecutive months.
"The current standard variable rate of 5.95 per cent is, outside of the GFC emergency low interest rates in 2009, the lowest level in over 40 years," said BIS Shrapnel Senior Manager and report author, Angie Zigomanis.
"As a result, affordability in most capital cities remains at early-2000s levels, which should be supportive of price growth."
Capitals' markets to see price growth
According to the report, the value of residential housing all over the country is set to increase over the next two years at least, building on the existing growth the housing sector has experienced. This will likely increase the demand for investment property in Australia, as investors clamour to take advantage of price increases.
Sydney and Brisbane are due to benefit the most, with growth predicted for the next three years in these cities.
A tight market in Sydney combined with increased affordability will drive a 14 per cent price growth in the Harbour City over 2014/15 and 2015/16. This is on top of the 15 per cent increase since 2013/14, which pushed the median house price to $795,000 in June this year.
The total price growth in Sydney over the three years to June 2017 is expected to be 10 per cent.
Meanwhile, Brisbane is forecast to see a price rise of 17 per cent on its current median price of $475,000 over the three years to 2017 - an average annual increase of 5.3 per cent. This is good news for the Queensland capital, which shows signs of recovery after a recent slump. Prices are set to rise by 7-8 per cent a year over the next two years.
There is equally good news in Melbourne and Perth. Melbourne's middle ring suburbs have seen high activity and price growth, which have seen the Victorian capital's median house price grow by 16 per cent over the year to June 2014. Perth, meanwhile, should see moderately positive growth in 2014/15, thanks to strong first home buyer demand in Western Australia.