Residential real estate may be on the verge of the next big growth cycle, according to McGrath.
In the group’s real estate’s spring market review, chief executive John McGrath said despite the Reserve Bank of Australia indicating an interest rate rise of 2 per cent in the next 12 to 18 months, 2010 still looks set to be a strong growth year for property values.
“The likelihood of rate rises in the short term along with the upcoming expiry of the First Home Owners’ Boost will take some of the sting out of the sub $600,000 market but this should be balanced by an increase in investor interest and the growth of an economy looking to get back on its feet,” Mr McGrath said.
“We may see prices in this lower end plateau for the next nine months while we see this rebalancing of key drivers but I anticipate it to continue its growth, especially in the Inner City and Beachside areas mid way through next year.”
According to Mr McGrath the upper end of the property spectrum is set for the biggest rise – a forecast that was supported by RP Data reporting a 5.7 per cent gain in Australian prestige property values from January to June alone.
“Buyers in the prestige sector have re-consolidated their positions and are heading into Spring with money to spend in prestigious suburbs where prices have fallen 15 per cent or more,” Mr McGrath said.
Mr McGrath said the company was already seeing the results of a bumper spring season with auction clearance rates in and around Sydney averaging 70 per cent compared to 46 per cent this time last year.
“This is due to strong demand, limited stock, vendors realigning their price expectations with market values and quality versus quantity,” he said.