Residential Property Predicted to Grow in Spite of Increases in Int Rates
On the back of yesterdays article ‘Tale of Two Cities’ which describes the differences in supply shortages between Melbourne and Sydney, Simon Johnson from The Age has written an article about QBE’s property growth outlook and it follows a similar theme.
House prices could jump 20%, forecasts show
House prices will continue to grow by up to 20 per cent over the next three years despite interest rates hitting a peak of 9.1 per cent, a respected business forecaster said today.
A QBE Housing Outlook 2010-2013 survey compiled by BIS Shrapnel forecasts house-price growth between 9 and 20 per cent in Australian capital cities over the next three years.
Perth, Sydney and Adelaide are forecast to grow the most while Melbourne, Darwin and Canberra will grow the least.
“Price growth is forecast to be strongest over the next three years in Perth, Sydney and Adelaide – all experiencing forecast rises of around 20 per cent in median house prices,” the report states.
Melbourne would be the weakest market over the next three years, with about 9 per cent growth, because affordability had become strained after significant price rises in 2009-10.
“We expect price rises will be underpinned by a deficiency of dwelling stocks across most capital cities, which in turn will lead to tight vacancy rates and solid rental growth, flowing through to increase investor demand,” said QBE chief executive Ian Graham.
BIS Shrapnel forecasts a variable interest rates will peak at 9.1 per cent in 2013.
“This will ultimately have a slowing effect on the economy and prices, although there may be one last gasp for price growth in some cities in 2012-13 where there is a large deficiency, or affordability is not strained,” the report says.
Decline in first-homebuyer demand has bottomed out.
BIS Shrapnel warns that outlook for the world economy remains a concern.
The US housing sector continues to languish and America’s employment recovery remains elusive, the report states.