We can feel confident about higher prices in 2013: Terry Ryder

Rising prices usually are preceded by rising rentals and/or rising sales volumes.

This is why we can feel confident about higher prices in 2013 in many markets across Australia.

I written several times in the past six months about a period of strong rental increases being followed, perhaps 12 months later, by an upturn in prices. Gladstone and Darwin both followed this pattern in 2012 and Perth has begun to follow suit.

The other indicator of price growth is increased sales activity. If sales rise strongly, so too will prices.

In Queensland, we saw a steady upturn in the number of sales in markets throughout Brisbane and across the state in the second half of last year, particularly in the December Quarter. The last three months of the year also delivered the first signs of prices rising in markets which had been dormant in the previous two to three years.

Figures from the Real Estate Institute of Queensland show that most of the state’s major markets had strong increases in the sales activity. The average rise across the state in the quarter was 8%.

In the Brisbane metropolitan area, Ipswich City and Redland City both saw an 18% rise in sales numbers in the December Quarter, while the Moreton Region in the north rose 20%. Logan City in the south (up 8%) and Brisbane City (up 9%) both experienced smaller but nonetheless healthy rises.

Outside the state capital, the activity stars were all markets which have struggled in the past four or five years, but now may be heading at last into better times. Sales numbers in Cairns rose 25%, with the Sunshine Coast up 27% and the Gold Coast 19%. But the biggest gains were in the Hervey Bay region, up 37%.

Of those markets, the one that inspires the most confidence in terms of near-term price growth is the Sunshine Coast, which has passed the bottom of its trough and has some major infrastructure developments coming up to boost economic activity and jobs.

Cairns is also is working hard to generate economic buzz and diversify beyond tourism – and should do better in the next five years and than in the last. The strong rise in sales activity may be the beginnings of recovery on the Gold Coast.

Hervey Bay has been a previous growth star, both for population and house prices, but suffered from over-building and has produced no growth in the past 3-4 years. All the signs suggest it’s now on the way back, with some significant construction projects to push things along.

Other regional centres to deliver solid activity growth were Toowoomba (up 6%), Townsville (up 9%) and Rockhampton (up 6%).

The price data for the December Quarter has the Sunshine Coast, Toowoomba, Hervey Bay and Rockhampton showing early signs of price growth. Mackay, which had earlier shown an increase in sales activity and rentals, recorded a 9.6% rise in its median house price in the December Quarter. Mount Isa prices are also starting to surge, following strong rental growth earlier.

We’re seeing increased sales activity elsewhere in Australia, especially in Perth.

One of my favoured areas of the WA capital, Rockingham City beside the ocean in the south of the metropolitan area, has been lifting sales numbers recently. Four months ago, house sales over 12 months totalled 1,580. The most recent figures show annual sales numbers have risen to 1,905 – and we’re seeing the first signs of prices rising.

Similarly, annual house sales in the inner southern suburbs of the Murdoch precinct have risen from 499 four months ago to 539, with prices starting to rise also.