While Australia’s home prices may not be expected to show much growth for the rest of this year, anyone expecting a fire sale may be disappointed , according to a recent report from the ANZ bank.
The bank’s latest Pan-Regional Housing Outlook states that Australia’s strong economy and tight housing market will assist is maintaining the current house price levels.
The strong labour market and skills shortage will put upward pressure on wages and, as a result, “forced” property sales will remain at low levels, the report said.
“The increasing cost of home loans and deteriorating affordability will prevent property prices from showing too much growth over the next 12 months.
The report’s author, ANZ head of property research Paul Braddick, said the Australian housing market was quite sensitive to increased cost of living but is unlikely to experience price freefall so long as there was not a rapid rise in interest rates or unemployment levels.
The on-going housing shortage would result in lower rental vacancy rates and higher rent, providing a “clear signal” to investors that the housing market was improving, Mr Braddick said.
Rents, capital gains
Property analysts RP Data have reported that rents nationwide by the end of March had increased by 2.9 per cent over the year and 4.8 per cent in first three months of 2011 alone.
Still, across all cities rental growth over the last year has been well below the five-year average annual rate for capital cities of 7.0 per cent, RP Data said.
Capital gains for units (up 1.4 per cent) outpaced houses (down 1.2 per cent) over the same period, analyst Cameron Kusher said.
The strongest performing capital cities for rental growth were Sydney (5.3 per cent), Hobart (4.5 per cent) and Perth (4.4 per cent) in the year to March, he said. Melbourne’s rents edged up 0.9 per cent to be among the worst performers, while they slumped 1 per cent in Brisbane.