The latest statistics from the Australian Bureau of Statistics confirm our forecast of a strengthening Australian property market.
This has been fuelled by three key factors:
- An increasing Australian population growth which has risen to 1.6% increase for the 12 months to 30th June 2012
- Lower interest rates after the Reserve Bank of Australia reduced the official rate by 1.75% since November 2011
- Value in the market as prices had reduced by 4.5% on the Weighted Average of All Cities to March 2012
The lower prices have become too tempting to a genuine pool of buyers seeking somewhere to live, but until recently had been putting off the decision to buy to see what may happen. The interest rate reductions have encouraged buyers to re-enter the market as mortgage repayments are now lower than rental cost for many prospective buyers.
It was inevitable that the market would strengthen due to the expanding population, so the price rises are not unexpected.
Over the 12 months to December 2012, the Weighted Average House price of the Eight Capital Cities rose 2.1%, with 1.6% of that growth achieved in the last 3 months of the year.
All Capital cities except for Melbourne and Hobart achieved a lift in prices over the year, with only Hobart having a decline in the quarter.
Of the major cities, Perth led the way which was no surprise given its current high level of population growth which has reached 3.3% for the year to June 2012.
Sydney had an impressive 2.3% growth for the quarter as the strong underlying demand continues to pressure soft supply and lead to an inevitable rise in values.
The Melbourne market also should signs of resilience with a 0.7% increase for the quarter. That wasn’t enough to stop a small decline of 0.2% over the year which confirms our predictions that the Melbourne market has passed it’s peak of cycle. It does show continuing strength of the Melbourne market, especially in the larger dwelling market, but we remain cautious of the smaller apartment market that will continue to experience oversupply in the short term.
With the likelihood of interest rates remaining low through most of 2013 and the population growth pressure persisting into the medium term, the prospect of sustained sensible growth seems highly likely for the Australian property market in the foreseeable future.
These strong underlying fundamentals continue to underpin the Australian property market and keep it as a safe and stable market.