GREEN shoots are emerging in Victoria’s real estate market as it embarks on a tempered but sustained upswing, according to the Australian Property Institute Victorian division.
API Housing Barometer research manager Robert Buckmaster said recent ownership transfer cost data recently released by the Australian Bureau of Statistics pointed to a recovery.
“Comprising stamp duty, real estate agents’ fees and sales commissions, conveyancing fees and miscellaneous government charges, ownership transfer costs provide a barometer of real estate transaction volumes,” he added.
Buckmaster said the ABS’ December quarter data indicates that Victoria is presently three months into a recovery phase of the present cycle, which began in mid-2010 and only bottomed in the September quarter of 2012.
“The upturn lasts on average 18 months but has ranges between 6 and 30 months,” he concluded.
Buckmaster said rising transaction levels indicated growing demand, a necessary precursor to firming capital values.
Consistent with the upturn in the property cycle, Victoria’s private sector dwelling approval numbers commenced a rebound over the latter part of 2012, ending a prolonged downtrend.
“Approvals for the 12 months ending January 2013 totalled 51,355, an increase of 2.8% over the previous year and marginally above the 2.4% long term average growth rate,”
Buckmaster said home lending was up, continuing a modest but sustained 15-month trend, and over the past two years housing affordability had improved markedly and mortgages plateau.
Several factors have underpinned this upturn, he said.
“Household net worth recovered through 2012 after turbulence in the aftermath of the Global Financial Crisis. Secondly, recent interest rate cuts have benefited households through lower average debt service costs, effectively increasing disposable income.
“Also, consumer confidence has rebounded since mid-2012, according to the Westpac-Melbourne Institute survey. February’s result of 108.3 was the strongest result in over two years and above the long-run average of 100. This can be put down to unemployment remaining low from a long-term perspective,”
He added that the household sector remains highly geared and consequently cautious as evidenced by a persistently high household savings ratio.
“The low interest rate environment is likely to persist with the Reserve Bank taking a benign view on the inflation outlook and cognisant of recent softening in the labour market.” Buckmaster said.
Property Review
