Confidence to increase rents

Confidence to increase rents

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With 80 per cent of property buyers believing now is a good time to be purchasing, values and rents are likely to see an increase in areas where confidence is strong.

RP Data’s survey of housing market sentiment, May 2013, noted this upwards shift in consumer expectations for housing market conditions and also pointed to a majority of respondents (55 per cent) expecting rental rates to rise over the next half year.

Consumer sentiment and increasing rents should widely attract investors, however the growth is expected to vary.

RP Data’s national research director, Tim Lawless, noted that 41 per cent of responses expected value rises over the next six months, while 52 per cent expected the market to remain steady. This overall number may be skewed due to subdued conditions in some market expectations.

“Based on the survey results, we’ve seen distinct differences from region to region where, as an example, 59 per cent of respondents in Perth expected values to rise over the next six months, and 56 per cent of respondents located in Sydney expect values to rise over the next half year," he said.

“In contrast, survey participants in Tasmania delivered a much more sedate reaction, with no local respondents expecting values to rise over the next six months.”

Overall, however, 30 per cent still expected price growth in Tasmania.

The ACT saw the largest expectation of growth from overall national responses, with 70 per cent expecting rises over the next 12 months, closely followed by Perth at 68 per cent.

“As consumer confidence in housing market conditions rises, we are likely to see a larger number of dwelling sales as the year progresses. We have already seen buyer numbers rise from their early 2012 lows, and transactions over the past six months are about 4.3 per cent higher than the same time a year ago,” Mr Lawless said.

AMP Capital’s chief economist and head of investment strategy Shane Oliver recently said that the housing market is looking a lot stronger, “but it’s still a long way from boom conditions".

“Since the first rate cut of this cycle, house prices are only up around two per cent nationwide,” he said.

He noted that while low interest rates should encourage investors and new home buyers back into the market, a return to boom time conditions isn’t ideal, as interest rates could then be increased quickly to counter the growth.

“It’s best if we see a sustained but moderate recovery,” he said.

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