Investor activity reignited in Sydney, Brisbane and Perth through 2012 and is set to continue in 2013. Low interest rates for both mortgages and deposits will drive increased interest rates in bricks and mortar investment in these cities, accentuated by tight rental markets generating high occupancy rates, relatively high yields and emerging capital growth.
The roller coaster ride for first home buyers is set to continue in 2013 with subdued activity levels expected compared to 2012. Changes to state government first home buyer incentive schemes created a surge in activity at various stages in 2012 as demand was drawn forward from this group. As a consequence first home buyer activity in Victoria, Queensland and New South Wales tapered off towards the end of 2012 and is set to remain quiet early in 2013. Increased market confidence, low interest rates, a solid economic performance and high rents will however see first home buyer activity rise through 2013, albeit from lower rates.
Prestige housing markets remained subdued in 2012, although the Melbourne market bucked the national trend recording healthy buying activity from a low base. Buyer activity in prestige markets should gradually improve through 2013, particularly if the recent solid growth in the local stock market is sustained. The Sydney prestige market has been dormant over recent years and began to show some early signs of life late in 2012. Buyers are set to recognise the value opportunities that Sydney's prestige housing markets are currently offering, particularly in the Northern Beaches.
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