Gradual, minimal house price appreciation in 2013

Making predictions pertaining to our residential property markets has been challenging since 2007 – however it appears that in 2013 that task won’t be as difficult (I hope). The Reserve Bank of Australia (RBA) gave a clear indication that their manoeuvring of the cash rate in 2013 will be closely reflective of Australia’s property data. Housing prices have moved higher: RBA governor’s statement, which confirms my prediction last week that I believe the official cash rate will not go below 3% in 2013.

Next rate cut up to banks, which is exactly what the RBA would be hoping,so it did not take long before Westpac lead the big banks below 5% on fixed home loans. It’s over to the others now – the NAB’s lowest fixed  rate is 5.34% for its one-year home loan, the Commonwealth Bank offers a one-year fixed of 5.19%, while ANZ offers a two-year fixed rate at 5.49% – so watch with interest should they decide to sharpen their respective pencils next week. If you’re planning on selling you should not sign  up, given when you are fixed you then qualify for break fees should you sell during your fixed term.

So the good news for property owners is that the house price recovery under way, which overall is a pleasant change given for once, the statistics agree that property prices are rising. Having said that, we are of the opinion that we will see a gradual albeit minimal capital appreciation throughout 2013. Further evidence is that AFG reports record January figures with $2.2 billion mortgages approved which represents their highest cumulative value ever recorded for the group. Australia’s population has a firm foot on the accelerator.

For those watching the Australian All Ordinaries closely, it currently sits at just below the 5,000 mark – historically when the All Ordinaries is north of 5,000 our property markets are booming. Although I foresee that what we are seeing presently is a false economy given investors have moved from protecting their cash reserves to re-investing back into the shock market. All Ords at 17,000? Just rally round this forecast well that is a prediction for 2030 – so don’t panic.

As we reported last week the Mosman, Cremorne and Neutral Bay volume of listings is down considerably on previous years. Interestingly, this statistic is not only restricted to our demographic markets, as Sydney property listings fall by ‘surprising’ 6% in January to lowest level since 2010: SQM. It is interesting to note that Mosman house listings continue to hover at the moment at approximately 25% down on this time last year. It will be fascinating to watch how these figures alternate through 2013.

However, our construction continues to shrink, which just so happens to be the 32nd month of contractions within our building industry.

Robert Simeon is a director of Richardson  Wrench Mosman and Neutral Bay and has been selling residential real estate in Sydney since 1985. He has also been writing real estate blogVirtual Realty News since 2000. The RWM real estate model has sold in excess of $1 billion in database sales globally.