Investors need to prepare themselves for modest house price growth across most capital cities in 2015.
The Domain Group’s Australian Housing Market Year in Review
predicts that housing markets around Australia are set to experience a year of flat activity in 2015.
This follows on from a year of expansion and strong price growth in 2013 and a year of moderation in 2014.
Domain Group senior economist Andrew Wilson said most capital city markets are feeling the effects of both local economic conditions and concerns over the national economy.
With a weakening economic outlook, particularly in terms of the jobs market, the case is growing for an official interest rate cut by mid-2015, he continued.
“But, without improved economic conditions and a return of incomes growth and confidence, marginally lower interest rates will be unlikely to have a significant impact on housing markets.”
This meant that, in 2015, house price growth for most capital cities is likely to be modest at best and will hover around the inflation rate.
Wilson said the rate of growth in each city will be dependent on local supply and demand factors - rather than the overarching impetus of low interest rates which have driven markets over the last two years.
Sydney, which was the leading performer over 2014, will outperform other capital cities again for the third year running in 2015.
A top performing local economy and the continued undersupply of housing will generate consistent buyer activity over the year, Wilson said.
“The inner and middle ring mid-price range suburban regions are set to continue to record double figure prices growth but, overall, growth is likely to be at least twice the inflation rate.”
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