Firming real estate market tipped for 2007

The Australian property real estate market stabilised through 2006 and most states can expect a stronger performance in 2007, according to a report from LJ Hooker Financial Services. Published in the Australian Property Investor Magazine March 2007. For more info, visit www.apimagazine.com.au.

First homebuyers are returning to the real estate market and owner-occupier activity is improving, the company’s general manager, Peter Bromley, wrote in a report, which went on to detail conditions in each state.

New South Wales Real Estate

Bromley said it was “genuinely difficult” to predict NSW real estate market movements at this stage. “Big price increases are unlikely through 2007, though the top end of the market - $2 million plus properties – should continue to climb,” he said. In what could be an interesting tip for real estate investors, Bromley said some regional NSW areas may outperform Sydney, naming the centres of Newcastle and Wollongong in particular.

Victoria Property

Melbourne had an “outstanding” 2006, with the LJ Hooker/BIS Shrapnel Residential Property Index showing growth of 17.8 per cent over the year. “This remarkable level of growth also shows no signs of slowing down, with the final three months recording growth of 4.8 per cent,” wrote local real estate analyst Warren Urquhart. The metropolitan real estate market property was very strong, while the outer suburbs were somewhat slower, mostly due to buyers “being very deliberate in their decision making,” Urquhart said.

Queensland Real Estate

Growth of 4.6 per cent over the three months to December 2006 suggested three interest rate rises during the year had little impact on the Queensland residential property market, the report said. Glenn Prior of LJ Hooker Financial Services in Queensland said the Sunshine Coast market real estate was particularly active in the lead-up to Christmas and the start of 2007 fround the Gold Coast unusually busy. Real estate investors were also active in Townsville and Chinchilla, on the back of ‘planned’ commercial activity. On these, Prior warned, “Caution is needed where a property market is being driven up by speculation.”

Western Australia Property

Perth was the standout performer of 2006, with the Residential Property Index showing 34 per cent growth for the year. However, Barry Hurst of LJ Hooker Financial Services said the unrelenting rises would have an impact on first time homebuyers. “The $440,000 median house price is already out of many first homebuyers’ reach,” Hurst wrote. “Some real estate market observers are expressing concern that the possibility of concessions for first home buyers, as mooted recently by the State Government, may cause this sector of the real estate property market to go to ground. Even the suggestion of the ‘carrot’ may result in a ‘wait and see’ attitude and that would certainly have an impact on the property market at large.”

Tasmania Property

Home loan activity for established homes was growing above the national rate in Tasmania and first homebuyers activity was also above the national average, Urquhart said. Prices also climbed. The northern suburbs had strong real estate sales through November and December, Urquhart noted, and the southern suburbs should see increased activity driven by land releases this year.

South Australia Real Estate

Andrew Morrison wrote in the report that the real estate outlook in Adelaide for 2007 was “one of general optimism.” “It’s fair to say that the overall performance of the Adelaide property market in 2006 was flat but there’s every sign that 2007 will deliver better results,” Morrison said. He said low property vacancy rates were attracting Australian real estate investors back into the market in “noticeable proportions.”

Australian Capital Territory

The ACT’s market has continued to defy market observers in Australian real estate, with the Residential Property Index recording a return of 4.3 per cent for 2006. “December was strong, with good auction clearance rates and above reserve prices achieved in most instances,” Bromley said. “Real estate developments are still going strong, especially in Canberra’s inner suburbs.”

Northern Territory Real Estate

The Northern Territory experienced browth through much of 2006 but there was some decline in the final two months of the year, Morrison said. Nonetheless, the Residential Property Index of Australia Real Estate showed a rise of 10.6 per cent over the year. “Relatively low sales volumes in the second half of 2006 may have had some effect on median house prices however Darwin property real estate owners should keep the positive annual rate of growth in mind,” Morrison wrote.