10 September 2009
Australian house prices are on the rise again
Many economists see the Australian housing market as being more robust than those of overseas countries. With a more optimistic outlook for the global economy, one should expect recovery in the housing sector to be underway, albeit reasonably slowly. The dreaded 'R' word has been narrowly avoided and the Australian economy has been one of the stronger performers globally. The result of this has seen a somewhat shaky but
ultimately generally steady housing market.
As can be seen in the chart comparing figures from ABS, RP Data and Residex, the indicators are that house prices in Australia are on the increase, after falling away in mid 2007. Key contributors to this have been the reduction in interest rates and the government assistance programs to first home buyers.
Click to enlarge
So what does this mean for the future?
As seen in Lending News of August 27, 2009, housing is more affordable than in 2007 as compared to the AWOTE
(Average Weekly Ordinary Times Earnings) figures. Add to this the flow on of reduced interest rates and the FHOG to the investment market and those looking to upgrade, and the future of the Australian housing market looks reasonably bright.
Another contributing factor to this positive housing outlook by economists is the
imbalance between supply and demand. Australia is experiencing sustained levels
of immigration and population growth in general. The impact is being seen
already within the rental markets across the country, where demand is
outstripping supply. Combine this with recent high costs of development, limited
availability of land and funding restrictions to developers being in place; one
can envisage demand for housing is likely to drive prices upward further. This, it has been expressed by respected economists, could signal a return for investors and developers to the housing market with renewed interest.
So, with market confidence becoming more prevalent, and the positive figures coming out of Canberra, the outlook for Australian housing in the short term seems bright for continued growth in housing prices. Affordability, on the other hand may prove more of a challenge.
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Head of Lending
Iain Pepper is a Vice-President and the Head of Lending for the La Trobe Group.Read full profile here.
La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 145 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.
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