Ensure you never miss an issue of the
real estate business bulletin
Residential markets to improve: BIS

Residential markets to improve: BIS

by Reporter 0 comments

Staff Reporter

While green shoots are starting to appear in the residential property market, BIS Shrapnel believes any improvement will not be consistent nationwide.

According to the latest Residential Property Prospects – 2013 to 2016, New South Wales and Queensland should continue to improve over the coming three years.

The emerging strength in Western Australia and the Northern Territory is likely to continue in the short term, but residential activity is expected to slow, with state economic prospects weakening as the resource boom winds down.

Underperforming economies and excess supply are forecast to continue to dampen conditions in the remaining states and territories.

BIS Shrapnel senior manager and study author Angie Zigomanis said the general improvement in residential markets seen since the latter half of 2012 was initiated by the low interest rate environment.

Since October 2011, the official cash rate has fallen by 200 basis points, translating to a 160-basis point fall in variable rates.

“The current standard variable rate of 6.2 per cent is the lowest level since 200 – outside of the GFC-induced low interest rates in 2009,” Mr Zigomanis said.

“Also, outside of 2009, home loan affordability in all capital cities is at its best level since the first half of the 2000s.

“As a result, we are seeing some improvement in some residential market indicators. Lending to both owner occupiers and investors has been trending upwards in the nine months to March 2013. Lending to first home buyers has also been trending upwards outside of declines in New South Wales and Queensland, where changes to first home buyer incentives have created a short-term dip in demand.”

However, further improvement is likely to be slow to gain momentum. From an economic perspective, the transition from an economy driven by resource investment to one driven by consumption and business and residential investment, will not be seamless.

Resource sector investment is estimated to have peaked – or will soon peak – while the rest of the economy remains subdued. The low interest rates are expected to eventually drive a stronger pick-up in retail spending, new dwelling construction and business investment – and consequently the economy – which will take time to filter through to greater purchaser confidence.

As a result, BIS Shrapnel still expects only a modest improvement in residential market conditions in 2013/2014, assisted by the potential for further cuts to interest rates. The residential market should become more buoyant over 2014/2015, as the non-resource sectors of the economy improve and take over as the main drivers of economic growth.

Over 2013/2014 and 2014/2015, the strongest conditions are forecast for New South Wales, Western Australia, Queensland and the Northern Territory.

Through 2015/2016, rising interest rates will begin to slow, strengthening markets in Sydney and Brisbane, while contributing further to the weakening of the Perth and Darwin markets, and postponing any recovery in the Melbourne, Adelaide, Hobart and Canberra markets.

le>.b-autolinks{text-decoration:underline}.b-autolinkshadowbox { display: inline; position: relative; cursor: pointer; color: #428bca;} .b-autolinkshadowbox:hover > span { display: block !important; } .b-autolinkshadowbox__links { white-space: nowrap; z-index: 999; display: none; left: 0; border: 1px solid #bfbfbf; border-radius: 5px; font-size: 12px; top: 12px;color: #000; padding: 10px; position: absolute; background-color: #FFF; box-shadow: 0px 0px 20px 1px #bfbfbf; } .b-autolinkshadowbox__links > a { display: block; padding: 3px 0; }
Residential markets to improve: BIS
lawyersweekly logo
promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2017

The REB Top 100 Agents ranking is the foremost ranking of agents in Australia. It has set the bar for excellence in Australian real estate. To be ranked as an REB Top 100 Agent is the standard real estate professionals strive for. See the full 2018 ranking here!

featured podcast

featured podcast
The difference between an average agent and one who dominates

McGrath Crows Nest’s Peter Chauncy is number 10 in this year’s REB Top 100 Agents ranking. Peter, however, is more likely not surprised ...

View all podcasts

Would you consider working for Purplebricks or a similar 'DIY' model?

Yes (7.2%)
No (80.9%)
Perhaps - make me an offer (12%)

Total votes: 209
The voting for this poll has ended on: July 13, 2018
Do you have an industry update?