Property could rebound in first half of 2012, but five factors must fall into place for prestige: John McGrath

Buyers don’t need to see a lot of price growth to regain confidence in the housing market, they just want to know that home values have stabilised, according to estate agent John McGrath.

"A lot of people are sitting there with cash in the bank waiting for the signal that the market has levelled,” he says.

"The underlying demand is there, people are just waiting for the bell to ring, and I think there’s a good chance that will happen in the first half of 2012.

"People are looking for some good news.”

But his summer wish list is expecting plenty, since he says "we need to see unemployment down, retail spending up, a resolution in Europe, improved bonuses and a good consistent quarter on the stock market for the prestige sector to move".

"Sentiment can turn quickly and behind the veneer of nervousness, there is a genuine desire to get into the market," McGrath adds.

McGrath suggests a lot of people de-leveraged in the GFC and they will be ready to buy again when their confidence is restored.

McGrath points to RP Data figures suggesting the window of opportunity to buy at the bottom is closing.

"Capital city home values recorded their best result in seven months in September, with falling prices slowing to only -0.2% seasonally adjusted while regional houses rose 0.1%."

He suggests with so many traditional asset classes appearing "unstable at best or volatile at worst", bricks and mortar would prove to be a popular investment avenue, particularly with the significant baby boomer market.

He notesthere had been two big investment trends in 2011 – more people buying through self-managed super funds and also increased investment from the Chinese, who see Australia as a great investment market with a strong currency and business economy and excellent education opportunities.

He has also noticed less demand from retirees in coastal markets "but this will inevitably pick up as the population continues to age".

"We’re seeing increased buyer activity and general positivity in a number of regional markets as people begin picking the bottom and taking advantage of great buying.

"Sydney investors are increasingly looking at major regional markets offering lifestyle, improving infrastructure and jobs growth such as Newcastle/Hunter, Wollongong, Byron Bay and Port Macquarie,” McGrath says.

"Rental demand, yields and capital growth prospects in these areas are excellent," he adds

Although the Gold Coast is showing new signs of life with vendors more realistic and buyer sentiment improving, McGrath concedes a recovery still has a long way to go.