australian home prices in 2010 could rise 10 per cent
News Posted On: 28 January 2010
John McGrath, chief executive officer of McGrath Real Estate Agents (MGREA) sees Aussie home prices continuing their upward trend this year it was reported on Thursday. McGrath said when interviewed he expected average home prices across major cities to rise by as much as 10 percent on 2010, with upward pressure coming from continued economic growth and an ongoing shortage of suitable properties for sale.
MGREA returned an annual turnover of US $3 billion on residential properties in Australia’s most populous state New South Wales in the year to June 2009, even as the Australian housing market suffered three consecutive quarterly declines. Since then numbers from the Australian Bureau of Statistics have shown that house prices across Australia’s eight capital cities rose by 6.2 percent in the third quarter (Q3) of 2009 compared to the same period in 2008.
On the back of a strengthening housing market and economy the Reserve Bank of Australia (RBA) have hiked interest rates 3 months in a row to stop house price inflation getting out of control. The RBA base rate now stands at 3.75 percent as of December 2009, and traders are looking for another quarter point rise in Q1 2010. Bearing this in mind McGrath sees healthy but not irrational growth this year.
In the interview he said “Over the next two or three years, we are going to see close to double-digit increases in most parts of the market. I’ve been expecting 8 to 10 percent increases in Sydney, and in some areas, it will be well beyond that. Historically, rates are still low. Of course we’re expecting some more rises, which we’ll see in a short space of time. But we’re finding 7 to 9 percent is what most people are used to in terms of the mortgage cycle, so that will still be at the bottom end of that range.”
There has been very little construction over the past few years,” continued McGrath, noting that although there has been some pick-up in new construction recently, “the building cycle is a slow one, so I suspect that over the next couple of years, there will continue to be a lack of supply. But there is development opportunity in abundance, once the lending frees up, and people start building again.”
He concluded, “As more stories of people who’ve made good investments in Australia and had good capital growth come out, the increase in overseas investors will continue.”
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