It looks as if the Australian property market may have averted a US style housing crash as prices in some cities have begun to rise for the first time since 2010, and according to a report in Property Wire, experts now think there are small signs of a revival which could begin to gather pace this year.
Data from the Australian Property Monitors show prices in Melbourne increased by 1.1% during the last quarter of 2011 while prices in Sydney remained the same after registering a fall of 1.8% during the third quarter, but prices in other capital cities fell slightly. Prices rose by 0.5% in Adelaide and Hobart during the last quarter of 2011, but prices in Brisbane and Perth fell by 1.2% during the same period. If there is a recovery underway it would appear to be extremely tentative at the moment, although it’s important to remember this is the first increase in prices since 2010.
However experts remain hopeful as housing affordability is improving due to the latest interest rate cut last November and lack of house price growth. Last year GDP growth was 3.2%, and is predicted by the World Bank to be 3.8% this year which is a pretty respectable percentage and this is expected to further encourage the housing markets to recover this year. Apparently there are already signs of more buyer activity in Canberra, Perth, Melbourne and Sydney, and data from the RP Data Rismark index shows the rate of price declines slowed towards the end of last year.
Experts have been predicting a housing market crash in Australia before the last few years, and although everyone expects price rises to remain subdued it does look as if prices might have bottomed out. Australia has also benefited from having tighter lending criteria and many other countries and has largely avoided excessive loans to borrowers who had little ability to repay them. One problem still remaining is that Australian property is some of the most expensive in the world and this is being exacerbated by the strength of the Australian dollar which may deter some foreign investors.