Sydney will lead a national property market recovery as early as 2008 with a potential 10% rise in house prices, according to independent property analyst Michael Matusik.
Matusik told Australian Property Journal yesterday that investors are likely to return in 2008 to take advantage of record low housing stock levels and a climate of rising rental yields.
In Matusik’s September Snapshot on new detached housing, the Queensland based analyst believes a 1960s-style housing recovery driven by an undersupply of detached housing stock rather than interest rate influences.
“Most housing recoveries in the last 50 years in Australia have been driven by declining interest rates with the exception of the 1960s where an undersupply of existing stock coupled with rising demand from overseas migration saw new housing starts rise,” Matusik said. “We envisage a 1960s-styled housing recovery this time around, as interest rates are likely to remain steady over the next decade or so.”
He cited changing demographics, changes to superannuation and most importantly the tight rental market, are likely to drive a recovery in housing starts.
“We are certainly more likely to see a rental-led recovery that an interest rate one.”
Matusik said that while Sydney house prices were expected to drop by 3.1% in 2006, they would likely rise by 2% in 2007 and as much as10% in 2008 – leading the national property price growth index.
By contrast, the 26.6% annual price growth for detached housing in Perth would translate to 2% growth in 2007 and a 5% drop in price growth due to current unsustainable sales levels in Western Australia.
While Sydney would lead the recovery, Melbourne would follow suit with Matusik calculating 8% price growth in Melbourne in 2008, 8% in Hobart, 5% in Brisbane and Canberra.
Matusik said housing supply levels would continue to deteriorate in NSW, Victoria, Queensland and Tasmania.
“For this reason, coupled with Sydney’s tight vacancy rate and rising rents, we believe that NSW led by Sydney will lead the next market recovery which will be primarily investment based.”
Matusik said the latest Housing Industry Association sentiment report shows 26% of NSW residents looking to buy a new house in the next 12 months intend to buy investment property.
He said a Sydney-led recovery would likely see a higher rate of migration to Queensland and more people from NSW sought affordable housing.
Matusik forecasts a return to the ‘house for life’ policy as restrictive affordability crept into the marketplace.
“People will age in place, move less frequently and take a lot more time selecting the area in which they live,” he said.
“More alternate housing forms will be needed with density being offset by proximity to amenities.
“Houses for life will increasingly become the norm especially in true masterplanned estates.”
By Adam Parsons
Snapshot extra – Snapshot 310 | ||||||
Underlying new housing demand | ||||||
Australian major urban centres | ||||||
2006 to 2011 | ||||||
Urban centre | 2006 | 2011 | % detached | Total anticipated annual demand | Total detached houses | Total attached dwellings |
New South Wales | ||||||
Sydney | 1,658,728 | 1,778,880 | 60% | 24,030 | 14,370 | 9,660 |
Newcastle | 211,996 | 227,394 | 80% | 3,080 | 2,473 | 607 |
Wollongong | 109,397 | 116,502 | 72% | 1,421 | 1,029 | 392 |
Albury-Wodonga | 41,994 | 46,023 | 80% | 806 | 643 | 163 |
Wagga Wagga | 20,964 | 22,221 | 83% | 251 | 207 | 44 |
Coffs Harbour | 22,146 | 25,170 | 64% | 605 | 389 | 215 |
Taree (Greater) | 20,550 | 22,353 | 83% | 361 | 300 | 60 |
Wingecarribee (Bowral-Moss Vale) | 18,962 | 20,685 | 92% | 345 | 315 | 29 |
Tamworth | 17,435 | 18,533 | 83% | 220 | 183 | 37 |
Orange | 15,881 | 16,809 | 84% | 186 | 155 | 31 |
Ballina | 17,621 | 19,230 | 65% | 322 | 208 | 114 |
Port Macquarie | 19,445 | 21,988 | 63% | 509 | 320 | 188 |
Dubbo | 13,968 | 14,784 | 80% | 163 | 130 | 33 |
Eurobodalla (Narooma) | 21,472 | 23,634 | 79% | 432 | 343 | 90 |
Total outside capital city | 1,100,160 | 1,181,005 | 81% | 16,169 | 13,086 | 3,083 |
Total state of NSW | 2,758,888 | 2,959,885 | 68% | 40,199 | 27,456 | 12,743 |
Victoria | ||||||
Melbourne | 1,456,890 | 1,578,529 | 73% | 24,328 | 17,784 | 6,544 |
Geelong | Leave a Comment       Welcome Back! | |||||