New South Wales’ house prices are anticipated to continue in the same vein as with recent times, for the coming six months.
Generally speaking, the New South Wales market has calmed and stabilised in the first half of the year, and should return to more realistic and sustainable levels although world financial markets may become volatile once again.
As predicted in our January 2010 Property Outlook, house prices in New South Wales increased by an average of between 0 to 5 per cent, and similar growth is anticipated in the third and fourth quarters of this year.
Some areas are experiencing impressive growth while others are retracting.
The new tax by the NSW government for home owners selling property over $500,000 will have a negative impact on the market, similar to the results of the NSW Carr Government vendor exit tax for investors.
The RBA increasing interest rates, particularly the last two rate rises, has already impacted on buyer confidence and housing affordability. It is First National’s hope that the RBA perceives it has now done its job and will hold rates where they are for some months, which would improve buyer confidence significantly.
Housing affordability has also come to the forefront in the state, particularly in Sydney, while other parts of NSW (regional and coastal) enjoy lower median prices and are attracting investors and first home buyers.
Overall, we expect to see investors return to the market as the financial markets become more volatile again.
Listings in some Sydney suburbs have been up since April, creating symmetry between buyer demand and supply, and maintaining robust prices in these locations with median prices typically above $800,000.
According to our survey, 85 per cent of respondents anticipate investor activity to increase, with the remaining 15 per cent expecting no change. Of those anticipating an increase, almost 80 per cent predict increases of between 5-20 per cent.
Interest rates are expected to continue to increase by around 84 per cent of respondents, with predicted increases varying between 0.25 per cent up to 2 per cent.
Rising mortgage repayments were the main explanation for Sydney becoming less affordable in the past year, regardless of earnings, along with increasing interest rates.
Sales volumes for the next 12 months are anticipated to increase by 90 per cent of respondents, on the back of 80 per cent of respondents having already experienced an increase over the last 12 months.
