Low interest rates and population growth have stimulated buyer activity in most residential markets, according to new research, but the elections are likely to have a negative impact on house prices regardless of who wins.
According to the CBRE’s Australian Residential MarketView Q1, 2013 report, the current fiscal environment is contributing to a rise in consumer sentiment that is prompting more people to enter the property market.
Resource-rich states like Queensland and Western Australia saw the most improved levels of buyer demand over the first three months of the year, however, CBRE anticipates the gap in the two-speed economy will narrow as mining investment contracts over 2013/14.
Nationally, house sales increased 6.1% over the 12 months to March 2013, while unit sales jumped 6.9% during the same period.
CBRE senior research manager Sam Reilly said that the low interest rate environment has helped build consumer confidence and this is translating into sales volume growth.
This is more evident in affordably-priced property markets, where investors are becoming more active on the back of sustained levels of rental growth. "Rising population levels are also likely to drive more activity in the housing sector, with some markets experiencing a supply shortfall in the short-term,” Reilly said.
Despite an improvement in buyer confidence levels and an upward trend in sales volumes, capital values experienced nominal growth over the past 12-months.
Reilly said that as Australia's mining investment activity reaches its peak and business investment slows over 2013/2014, capital growth prospects will be constrained when viewed in combination with expected levels of budget tightening from Canberra.
"Regardless of what party is in power following the election, fiscal contraction will occur which will limit any major recovery in house prices as it is likely to impact on buyer sentiment levels," he says.
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