Job growth to lift home prices
Low inflation also expected to contribute to a surge in values over the next 12 to 18 months, writes Peta Tomlinson
Four consecutive months of housing approval loan growth indicate Australia's property sector is on the rebound. But with the stock market's rich returns still proving irresistible to many investors, analysts do not believe it is the start of another property boom. They say stable interest rates, low inflation and job growth will stimulate a surge in house prices nationally over the next 12 to 18 months.
The Housing Industry Association reports that population growth in regional areas was equal to or faster than in Australia's three biggest states - Western Australia, Queensland and the Northern Territory - in the past financial year. Here are some of the recent trends in different states:
As housing affordability bit in inner and suburban Melbourne, more people moved to rural Victoria, where government job creation schemes brought renewed employment choices. Regions well served by infrastructure and having sustainable economic activity were targets for population growth, the Real Estate Institute of Victoria said.
The towns of Geelong and Bendigo recorded Victoria's highest regional price growth year on year. Greater Geelong's median price rose 5 per cent to A$294,000 (HK$1.92 million) and Greater Bendigo 2.2 per cent to A$230,000.
New South Wales
Sydney house prices continue to struggle, and it is the only capital city where prices fell (by an average 0.4 per cent) in the first quarter of this year, according to the ABI House Price Index. Developers are reportedly 'slashing prices and offering discounted finance to try to kick-start the market'.
Because rental availability is near zero, many commentators agree investors are taking advantage of the favourable conditions and are being drawn back to the market. The ANZ Bank believes that vacancy rates will fall below the critical 1 per cent mark by year end, prompting a 'surge in rents [that] will rekindle investor and developer interest'.
It may have started already, with ABI figures showing investment lending in New South Wales picked up in February. And auction clearance rates have been consistently above 60 per cent this year, the strongest since late 2003.
Research group Adviser Edge predicts that Sydney's median house price will rebound by 10.5 per cent this year after three years of falling prices.
Brisbane house prices rose an average 3.4 per cent, according to the latest available figures (last December quarter), up 6.3 per cent over the year. While the Gold Coast and Sunshine Coast in southeast Queensland performed well, Real Estate Institute of Queensland managing director Dan Molloy said the real success lay in the northern and western regions.
With the resources boom and state-wide population growth cushioning sales from the negative effects of prolonged drought, markets from Rockhampton to Cairns and west to Mount Isa all experienced healthy growth.
Median house prices in South Australia's regional centres have remained strong this year, a result of the resources boom. According to the Real Estate Institute of South Australia, country homes rose to an average A$208,000 in the March quarter, up from A$202,000 in the December quarter. The statewide median price is now A$278,000, up from A$257,000 12 months ago.
Hobart's 3.8 per cent March quarterly increase took values up to 10.5 per cent over the year. While this puts median house prices at A$289,792, sales decreased by 15.5 per cent over the year to 224. However, sales of units, flats and town houses increased by 8.1 per cent to 80 sales.
According to Real Estate Institute of Tasmania data, Launceston prices rose by 7.9 per cent to A$230,708 from March last year to last March, with sales up 6 per cent to 106. Units rose marginally at 1.2 per cent. Strong annual gains have been reported in the northwest areas of Burnie (17.5per cent) and Ulverstone (26.7per cent), while Devonport gained 4.8 per cent.
Turnover for houses and units has slowed across the Northern Territory, although prices have held steady and shown a marginal increase. House sales were down 24.5 per cent for the March quarter.
The number of homes offered for sale in Perth increased by 21 per cent to 13,800 in the first three months of this year, and prices rose by an average A$10,000 according to the Real Estate Institute of Western Australia.