The property market is set to gain more strength over the next 12 months, with interest rates stabilising and buyer confidence improving, McGrath Real Estate chief executive John McGrath has said.
According to Mr McGrath, factors including rising rents, a national housing shortage and an improving economy will be the key drivers of the market in 2011.
"In Sydney, demand is strongest from upgraders and investors and I'm expecting prices to continue rising over the next three years - possibly by 8 per cent to 10 per cent in 2011, especially close to the CBD and the beaches," he said.
Mr McGrath said investors have not generally been deterred by interest rates, and some are using their self-managed super funds to invest in the property market. However, he cautioned the RBA to keep rates in check.
"It's disappointing to see the Reserve Bank of Australia and the big four banks have both raised rates again as I see some levels of fragility in borrowers, especially those who borrowed not long ago at rates around 5 per cent. We can only hope we may be close to the end of a raising rate environment, otherwise we may see some forced selling taking place," he said.
In addition, Mr McGrath said location will continue to be a key factor for buyers over the next 12 months.
"We're seeing new anecdotal evidence of young families choosing to swap the city life for coastal and country living. Lifestyle is their priority along with affordability, and regional markets are particularly attractive price-wise at present," he said.
"For those looking to make a sea change or lifestyle change, then I see the next six months as a window of opportunity for good buying."