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.

Graph
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.


Best regards
Iain Pepper




QUICK LINKS

> Home
> About Us
> Login - Product Guide
> Loan Applications
> Loan Products
> Partner Portal
> Privacy Charter



Iain Pepper
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.

Copyright 2010 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial. Disclaimer




IMPORTANT: This message, together with the La Trobe Financial website (www.latrobefinancial.com.au) and all its contents have been prepared for general information only and should not be taken as legal or financial advice, and as such the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before acting on any information present on this message or the La Trobe website. La Trobe Financial Asset Management Limited ABN: 27 007 332 363 and AFSL No: 222213 is the issuer and manager of the La Trobe Australian Mortgage Fund. It is important for you to read the Product Disclosure Statement for the Fund before you make any investment decision. You can get a copy of the PDS by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you. (1) The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund, and may achieve lower than expected returns. Investors risk losing some or all of their principal investment. (2) The rating report is available on the La Trobe website or upon request. The rating is only one factor to be taken into account in deciding to invest. (3) Withdrawal rights are subject to liquidity and may be delayed or suspended. (4) Rates (where shown) are indicative and for information purposes only and must be confirmed by your La Trobe loan manager upon formal application. Rates are subject to change. Please refer to http://www.latrobefinancial.com.au for full comparison rate schedule