Buyer confidence to bounce back
Improved buyer confidence will help the NSW, WA, QLD and NT property markets perform well in 2012, new research has revealed.
According to First National's 2012 housing outlook, NSW should see an improving market; Victoria is showing signs of recovery, but still has a way to go, Queensland is demonstrating it has lots of potential and is finally on its way back from the devastating floods and cyclones it experienced in 2011; WA and NT will continue to be strong performers especially in resource rich areas; Tasmania is marking time but will pick up as it progresses through 2012; and South Australia will continue to be a solid performer.
All First National state chairpersons agreed buyer confidence should improve in the next six months, as a result of lower interest rates, improving local market conditions and a more stable global economy.
For some states, worsening global economic conditions and possible job losses have resulted in an increase in mortgage defaults and this trend may continue until more certainty and stability returns to the US, European and Chinese economies.
According to the state chairpersons, the key challenges for the Australian property market in 2012 will be focused on sustaining a strengthening consumer confidence, which are at the mercy of ongoing stability in global economies and job security; government policy and legislation (especially the introduction for the carbon tax and reduced government assistance for first home buyers); and interest rate movements.
While demand is still expected to remain relatively soft into 2012, a recent sharp rise in Westpac's time to buy a dwelling index may be the cue for a housing upturn.
"This will, however, be dependent on ongoing interest rate cuts, job security and resulting consumer sentiment," First National chief executive Ray Ellis said.
"Interest rates are expected to drop further with rate cuts of up to 0.5 per cent, although some say it could be as much as 75 to 100 basis points.
"Any future interest rate cuts are expected to stimulate buyer activity as confidence improves and refinancing options broaden, ultimately strengthening the property market.
"With the Australian housing market now affected by daily international updates and commentary, confidence can change at a moment's notice."
Residential markets are expected to remain initially subdued in 2012 as consumers seek to pay off debts. However, falling house prices and interest rates should stimulate some activity, particularly among bargain hunters who have been squirreling away savings and are now cashed up.
"Our members believe the strongest growth in their regions will come primarily from upgraders, followed by investors, then retirees and lastly from first home buyers," Mr Ellis said.