Optimism in NSW property market that low interest rates will improve confidence
The New South Wales property market is set to improve in the second half of 2012, with signs it may already be on the upswing in many areas, but any recovery is expected to be gradual, according to First National Real Estate’s 2012 Property Market Outlook Mid-Year Update.
The Update, released this week, is based on a survey of the 400+ member network, and provides an insight on what member agents expect the market to do, drawing on their experience at the grass roots level.
There is general feeling of optimism in New South Wales that reducing interest rates will increase confidence in the property market.
As buyer confidence improves, so should conditions and the market.
The key influencing factors in the next six months for the market will be interest rates, buyer confidence levels, the global economy and lower levels of new listings.
Banks need to pass on interest rate cuts, and the state government needs to release more land and lower costs to support the property market in its recovery.
The banks are proving to the marketplace they can, and will, do what is right for their profit, rather than what is right for the consumer.
And the state government’s lack of funds to complete any major infrastructure works could restrict the amount of land available, both of which will hinder recovery efforts.
The Update says the strongest growth will come from the investor sector, followed by upgraders and retirees.
Investor activity will increase as a result of improved buying opportunities and better rental yields.
Property prices should stabilise, with some upswings, with price movements underpinned by buyer confidence, especially in the areas of mid-north coast, Southern Highlands, central coast and greater western Sydney.
The rental market in NSW is expected to remain relatively strong overall, although this will depend on the region.
Members in greater western Sydney, Sydney metropolitan, mid-north coast, northern rivers and Snowy Mountains have strong rental markets and are expecting vacancy rates to fall or remain the same.
Interest rates are expected to reduce further, adding to improving affordability levels, strengthening buyer confidence and stimulating activity in the slow property market.
The rising unemployment and increasing living expenses, including the introduction of the carbon tax, are expected to put pressure on mortgage holders, with 41% of NSW members expecting increased mortgage defaults in their region.
The commercial property market will prosper from any improvements in job opportunities and consumer confidence.
Stunted growth in the business sectors, especially retail and tourism, is having a significant impact on the state’s commercial property market, and any gains in general economic conditions may stem the downward trend.
The relatively high value of the Australian dollar will dampen activity in rural property markets, along with slow buyer activity.
According to the Update, the key challenges facing local NSW property markets are vendors adjusting prices to meet market expectations, low population growth resulting in reduced buyer numbers and unstable global and domestic economic conditions.
Economic conditions are of particular concern and affecting the market in the regions of the Snowy Mountains, south coast, Southern Highlands and Southern Tablelands.
Mike Millington is chairman of First National Real Estate NSW.
The Mark at Sydney's Central Park
Much has been spoken about the global property market and that our market will ultimately follow a similar fate and I am always at pains to point out not all property is created equal.
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