Housing Market Report

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.

RBA KEEPS RATES ON HOLD

At its first board meeting for 2013, the Reserve Bank has decided to leave the official cash rate on hold.

Earlier today, the board judged that it was prudent to take a wait and see approach to rates, leaving the cash rate stable at three per cent.

Speaking about the Reserve Bank’s decision, RP Data’s national research director Tim Lawless said the RBA was “reasonable satisfied” with how the housing market has played out since it embarked on the rate cutting cycle back in November 2011.

“Since that time dwelling values across the combined capital cities of Australia have increased by 0.8 per cent, and values are up 3.1 per cent since bottoming out at the end of May last year,” he said.

“Most other indicators are also showing some subtle improvements, albeit from a low base.  

“Consumer confidence has shown some improvement, commodity prices are once again on the rise, and share markets have shown some consistent gains as well.  

“The big wild card remains the labour market; how high will unemployment go and at what level will the RBA react with a further cut to the cash rate.”

LJ Hooker deputy chairman, L Janusz Hooker, says mortgage holders should receive some extra relief during the coming months, even with a more buoyant housing market during January.

He predicts cuts of around 50 basis points during the first half of this year, but says it was premature to make a move in February.

"Interest rates here are at three per cent and, while at historic lows, most of the developed world has rates below one per cent, so there is plenty of room to move,’’ Mr Hooker says.

"The RBA are going to have to start making cuts sooner rather than later if they want to see results in the second half of the year.’’

Source: http://www.rebonline.com.au

The 10 reason why Australian property prices will rise 5% to 10% in 2013

Leading Sydney estate agent ‎John McGrath has listed on his Facebook page the 10 reasons why he believes the residential market will be 5% to 10% higher by the end of 2013.

1. The Australian share market is recovering quickly, and this will generate (and replenish) great wealth for many Australians.

2. China is on the surge with an 8% anticipated growth rate this year (and beyond), and we will benefit more than any other country.

3. We have record low interest rates, with existing and new borrowers reaping the benefits making property more affordable.

4. We have a nationwide housing shortage and will for some time, so demand will outstrip supply in an improving sellers market.

5. Cash and term deposits are becoming far less attractive, and many people will see the time is right to switch from cash into growth assets.

6. Rents will continue to climb in the face of the housing shortage providing investors increasing yields over the next few years.

7. Self-managed super funds (SMSF) investing directly in residential property is the biggest change I’ve seen in the last 12 months

8. Luxury homes are back by 20%-40% in value and will provide great buying for the recovering professional market buyers (read Palm Beach weekenders are about to become mega popular again!).

9. Most experts are tipping a landslide change in federal government, which will give great confidence to the business community.

10. As all the above happens in our connected community we’ll see a surge of confidence and FOMO (fear of missing out), which will stimulate continued investment over the next three- to five-year cycle

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