Slower House Price Growth for 2011
Property analysts say that first home buyers and investors will cause house prices to increase by about five percent next year. With residential property prices at a relatively stable level, a tight residential rental market and normal first home ownership levels, the real estate industry will likely experience growth in 2011.
House price growth will get pressure from increasing rental demands and higher income. Housing demand will be low during the first six months of next year though is expected to pick up after that. The slow movement in the market for the first half of 2011 is due to the latest interest rate increase by the Reserve Bank of Australia.
Increased rental fees will provoke investors to put up more residential properties. There are forecasts of an annual house price growth within the five to eight percent range. Investor finance is also a major factor in determining the growth of house prices but succeeding interest rate increases can do damage.
There are three RBA rate hikes predicted for this year, one in April and the last two coming in during the second half of 2011. Meanwhile, the strong Australian dollar can drive many foreign investors especially Asian investors, away from the market. Darwin and Perth will experience strong growth with Melbourne and Sydney expected to post strong to average growth.
First home buyer activity will pick up during the early stages of 2011 but expected to still exhibit signs of caution. The improving economy and increasing wages will push the demand for residential property.
