Report Indicates a Median House Price Increase
(31.01.12)
A report released by Australian Property Monitors indicated the national median housing price increased from $533,521 to $533,650 in the December 2011 quarter.
A Senior Economist from Australian Property Monitors says the result is a tentative sign the housing market is recovering with capital cities expecting to gain momentum throughout 2012.
Melbourne experienced the greatest price increase of 1.1%. The Sydney market remained flat, but has only fallen once over 13 quarters since September 2008. Adelaide and Hobart recovered rises of 0.5% in house prices, while Canberra, Darwin, Brisbane and Perth all experienced slight falls in median house prices.
Australian Property Monitors say an improvement in housing affordability, followed by falling interest rates as well as subdued house price growth should see most capital cities around Australia recover through 2012.
It will be interesting to see if the economic situation in Europe will affect these expected changes in the Australian property market through the first half of 2012.
Will Australian Property Bounce Back in 2012?
(18.01.12)
According to a report released by the Housing Industry Association (HIA) the Australian Property Market was described as softening in 2011, which is positive considering there was speculation it may have crashed. Data released by RP-Data indicates a modest price gain of 0.1% for capital cities and 0.3% for regional homes in November 2011. This is the first monthly increase since December 2010; a sign that the worst of the residential property slump is over.
Economists believe the interest rate cuts late in 2011 will result in a return to dwelling price growth in 2012. The HIA report has identified several underlying strengths in the Australian property market, which may increase investor confidence.
Will these strengths increase the likelihood of you investing in property this year?
- Borrowers are highly able to meet monthly payments.
- With a high rate of savings, many potential buyers have enough saved for a housing deposit.
- Low vacancy rates are driving up rent prices.
- Low interest rates are making property a more attractive investment.
Home-Building Approvals Increased in November
(11.01.12)
New data released by the Australian Bureau of Statistics (ABS) indicates a rise in building approvals of 8.4% to 11,424 units in November compared to a seasonally adjusted 10,359 in October.
Economists had forecasted a 6% rise in approvals for November. A Chief Economist from HSBC said additional interest rate cuts from the Reserve Bank of Australia may provide a boost for the housing industry.
The Reserve Bank of Australia ended 2011 with back-to-back interest rate cuts, which left the official cash rate at 4.25%, while the ABS said in the year to November, building approvals were down 18.9%.
A Macquarie Senior Economist indicated their expectation is reasonable growth as potential homebuyers start responding to interest rate cuts in the first half of 2012.
It will be interesting to see what percentage of the building approvals are for investment properties when mortgage data is released next month.
What to Expect from the Property Market in 2012
With back-to-back interest rate cuts just before the end of 2011, it will be interesting to see how the property market will begin in 2012.
As the interest rate cuts were eventually passed on to loan holders and the prices of homes fell in some areas it can be argued that affordability of the property market has risen. With further interest rate cuts expected from the Reserve Bank in February or subsequent months, 2012 may be a good time for investors to enter the market or expand their portfolios.
On the other hand, some investors remain cautious as Australians have shifted from spending to saving and from buying property to renovating (according to the Australian Bureau of Statistics). The Australian Government is attempting to produce the promised surplus, so it is unlikely investors will receive the grants which were on offer only a couple of years ago, which resulted in first-home buyers entering the market and investors growing their portfolios.
It will be interesting to see investor’s reactions to the Reserve Bank’s decisions on the interest rate during the first quarter of 2012.
House Prices on the Rise!
For the first time in almost twelve months housing prices rose 0.1% in November in capital cities around Australia. Perth, Canberra and Melbourne all experienced property market rises, while Hobart, Darwin, Adelaide and Brisbane experienced further decreases. Sydney’s market remained flat. In regional areas house prices increased by 0.3%.
The November data is a welcome result as capital city dwelling prices fell 2.8% in the first eleven months of 2011. Regional markets have performed better throughout 2011 experiencing a 2.6% increase during the same time frame.
A Riskmark Director states, “This augurs well for housing activity during the first quarter of 2012, which we project will rebound strongly.”
Will this positive activity in the real estate market affect the Reserve Bank of Australia’s interest rate decisions in the first quarter of 2012? We will continue to monitor housing prices closely as the New Year progresses.