Sydney, 4 June 2013-Low interest rates and improved levels of population growth have helped stimulate buyer activity in most major residential markets across the country, new research shows.
According to CBRE’s Australian Residential MarketView Q1, 2013 report, the current fiscal environment is contributing to a rise in consumer sentiment, which is prompting more people to enter the property market.
The resource-rich states of Queensland and Western Australia saw the most improved levels of buyer demand over the first three months of the year, however, CBRE anticipates the gap in the two-speed economy will narrow as mining investment contracts over 2013/2014.
Nationally, house sales increased 6.1% over the 12 months to March 2013, while unit sales jumped 6.9% during the same time period.
CBRE Senior Research Manager Sam Reilly said the low interest rate environment had helped build consumer confidence, which was translating to sales volume growth. This was more evident in affordably priced property markets, where investors were becoming more active on the back of sustained levels of rental growth, he added.
“Rising population levels are also likely to drive more activity in the housing sector, with some markets experiencing a supply shortfall in the short-term,” Mr Reilly said.
Despite an improvement in buyer confidence levels and an upward trend in sales volumes, capital values experienced nominal growth over the past 12-months.
Mr Reilly said as Australia’s mining investment activity reaches its peak and business investment slows over 2013/2014, capital growth prospects will be constrained when viewed in combination with expected levels of budget tightening from Canberra.
“Regardless of what party is in power following the election, fiscal contraction will occur which will limit any major recovery in house prices as it is likely to impact on buyer sentiment levels,” Mr Reilly explained.
Despite this, development activity in Australia is building, with a number of markets experiencing a jump in activity.National building approvals increased 4.7% for the 12 months to March 2013.
Perth has seen substantial residential building growth over the past year, with strong employment prospects and nation-leading population growth underpinning a recovery in construction.
CBRE Regional Director of Residential Valuations Tom Edwards said limited new housing stock was driving consumer demand for vacant land in the Western Australian capital.
“A shortage of available housing stock in Perth is stimulating building activity and also contributing to price growth in the vacant land sector,” Mr Edwards said.
“More recently in Perth, there has been increased activity in the low $1million range of the market, while the southern metropolitan area has seen considerable demand for properties up to $500,000.”
The report highlighted a growing number of sales transactions in south-east Queensland’s residential market over the quarter, with the sub-$500,000 price range experiencing significant movement.
First-home-buyers remained relatively absent in the Sunshine State, however an increase in investor activity has assisted to fill the gap in overall buyer activity levels.
While south-east Queensland has enjoyed a period of improved sales volumes, house values are not expected to enter a high growth phase given the challenges that still face the state’s construction, tourism and public sectors.
Mr Reilly said nationally, the residential property sector still had some distance to go until pronounced capital growth would be seen in the major markets.
In the short-term however, low interest rates and renewed levels of demand are driving an improvement in market conditions and more optimistic outlook for the residential property sector.
For Australian/international news or global stories, follow us on Twitter.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2012 revenue). The Company has approximately 37,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website atwww.cbre.com.au.