“Sydney is facing an acute housing shortage predominantly in the lower and middle end of the market."
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Australian house prices could rise 7% in 2013 if eurozone holds together: SQM Research
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Capital city property prices are forecast to rise by between 4% and 7% in 2013, with Sydney, Darwin and Perth expected to be the strongest performers under favourable economic factors, according to the 2012 SQM Research Boom and Bust Report.
Double-digit house price growth is in the upper range of forecasts for Perth (12%) and Darwin (14%), with Sydney just under (9%) under a base-case scenario of terms of trade falling but then stabilising; the cash rate falling by 50 basis points; and the Australian dollar hovering at parity against the US dollar.
Even under an unlikely worst-case "wild card" scenario of a break-up of the eurozone, terms of trade crashing, banks rationing credit and the RBA forced to cut rates by 150 basis, the impact on property prices would be small, with SQM Research forecasting a maximum 3% fall in house prices.
The Perth and Adelaide housing markets would suffer the most pain under such a scenario, with SQM Research forecasting as much as a 5% fall in Perth dwelling prices, with 4% maximum falls in Brisbane and Melbourne.
SQM Research managing director Louis Christopher tells Property Observer that Sydney remains the “blue chip of real estate markets”
“It’s a deep and safe market."
However, he says Sydney is very much a two-speed market, with the outer-ring suburbs expected to outperform but no recovery in sight for the prestige market, which could fall further in 2013.
“Sydney is facing an acute housing shortage predominantly in the lower and middle end of the market. In the past, the city benefited from the booming financial sector, however, the GFC has had a direct impact on the sector and ultimately the housing market in the city,” says the Boom and Bust report.