NSW country to be strongest region for price growth: Residex
Residex's John Edwards forecasts annual price growth of around 4% for houses Australian-wide and 2% for units over the next five years.
These predictions are lower than what was forecast earlier in the year.
"This is a consequence of the larger than expected rate of growth in the last 12 months and an increasingly unaffordable market," Edwards noted.
"However, these predictions are significantly lower than the average growth rates achieved over the last 20 years."
There are two markets in Australia that, in reality, set the pace for housing markets across the country – Sydney and Melbourne. He has Sydney leading with 4% annual growth over the next five years, with NSW Country capturing even stronger growth prospects.
"These two markets (Sydney and Melbourne) combined account for more than 50% of all dwellings in Australia," he added.
The data for the unit markets in Sydney and Melbourne is pointing to a future slowdown.
The capitals in the resource states (Brisbane and Perth) are following a similar pattern to Sydney, however their growth cycle has been small and these assets are producing growth rates that contradict the hype about a ‘property bubble’ or ‘boom’.
Source: Residex/Onthehouse
"In my view, housing markets are largely driven by consumer sentiment and the consumer sentiment index is a leading indicator of near-term future growth or activity in the markets," Edwards said.
"The September results indicate that, other than in Sydney and Melbourne, market performance is lacklustre."
He noted sales activity on a national basis, while higher than it has been since the first quarter of 2010, was still less than its peak achieved in July 2002 when annual sales were in the order of 572,000 dwellings.
"Take care with your property transactions and don’t over leverage – now is not the time to be excessively aggressive," he blogged on Switzer Homes Loans.
"Unaffordability has now reached a level where first home buyers are excluded from certain property markets.
"The main central dwelling areas of capital cities are becoming the “home” of investors, who are providing rental accommodation for the younger population."
