THE PROPERTY pundits got it wrong in 2009 predicting residential property prices would be decimated, in fact, overall they rose thanks to the remains of government stimuli and panic buying in the first home buyers market.
The Australian Property Institute believes 2010 could well be a totally different prospect if interest rates continue to rise.
API Government spokesperson Justine Jacono told Australian Property Journal that the GFC that was predicted to plummet property values didn’t come to fruition for most sectors of the property market.
“The high end residential market clearly declined; but with the assistance of the 1st home buyers grant, the lower end of the residential market under $500,000 surge. The housing market has also been under pressure from increased population growth.”
But Jacono questions what will happen in 2010: “Will we see the property market boom?”
According to the API, the forecast for 2010 is linked very closely to the banking industry and the Reserve Bank.
“Consecutive interest rate rises in the last quarter of 2009 and the first home buyers grant ceased at 31 December 2009, both are major influences in the residential market at the lower and even the middle range,” Jacono adds.
“The lending policies of the banking industry will also impact the investment sector with the ability to lend and availability of cash a critical element in many developments.”
Also January 2010 is a important date for municipalities with the revaluation of all properties in Victoria currently underway. The revaluation takes place every two years with the last revaluation cycle reflecting levels of value at 1 January 2008.
According Jacono the sales activity around January 2010 will predominantly set the levels of value for the 2010 Revaluation which will first appear in Councils rate notices in July/August 2010.
Concerns within professional organisations such as the API are focusing around there being too much hype around rising property prices and the need to buy.
“People have to factor in the potential of further rising interest rates throughout 2010 and affordability. Buying property without factoring in potential changing circumstances that may impact on repaying a loan can be very dangerous!” Jacono concluded.
Already it has been indicated in banking circles that Westpac aren’t too keen to lend too much on any type of property going forward in 2010.
One Westpac banking official told Australian Property Journal the feeling is that people are paying too much for property and “if the market does hit the wall there will be a lot of people hurt”.
Australian Property Journal
