According to ANZ Bank’s latest Pan-Regional Housing Outlook Australia’s home prices may well hover for the rest of this year without a “wholesale downward shift” in values.
The report argues Australia’s buoyant economy and tight housing market will continue to keep house prices steady.
The strong labour market and skills shortage will put upward pressure on wages and, as a result, “forced” selling of homes will remain at low levels, the report said.
“Nonetheless, rising interest rates and deteriorating affordability will cap price gains and we expect little movement in house prices over the year ahead,” the report said.
Paul Braddick ANZ head of property research said the local housing market was “delicately poised” but would avoid further price drops so long as there was not a rapid rise in interest rates or unemployment levels.
The on-going housing shortage would result in lower rental vacancy rates and higher rent, providing a “clear signal” to investors that the housing market was improving, Mr Braddick said.
In fact the latest results from the RP Data – Rismark Home Value Indices RP Data show that over the 12 months to March 2011 capital city rental rates have increased by 2.9% which is well below average. However, over the last quarter, capital city rents have increased by a much larger 4.8%.
The view that rents are starting to increase is supported by the most recent CPI data from the ABS which suggests that rents have increased by 1.3% during the first quarter of 2011.
