Sydney tipped to be best-performing residential market in 2012: Tim Lawless

The 2012 real estate market will remain much the same as 2011, with Sydney the best bet for investors, according to RP Data national research director Tim Lawless.

“I expect all consumer activity (retail trade, lease finance and housing finance) to remain subdued as households continue to pay off debt and look to reduce their debt burden,” he told Sold magazine.

“So long as these conditions continue, the prospects of any significant growth in property values remain a way off.”

He says in the best scenario values will increase in line with inflation, but Sydney and Brisbane are likely to remain healthy.

“The overall prospects would appear to be strongest in Sydney after no growth in values for such a long time, and Brisbane due to its relative affordability to Sydney.”

“Melbourne is likely to be the weakest performer after values have increased by almost 45% from the beginning of 2007 to August 2011.

“If interest rate cuts do come to fruition, as many expect, we will probably see an increase in sales activity, however I do not expect that it will result in a significant uplift in values.”

Darwin has the highest yields among Australian capitals, with population growth strong and many short-term residents unwilling to commit to buying a house.

“Many residents do not live in Darwin for the long-term there has historically been strong rental demand,” Lawless says.

Lawless says the auction market is weak at the moment due to low levels of consumer confidence, slow growth in housing finance and general consumer caution.

“Last week, the weighted average capital city auction clearance rate was recorded at 46.4%. At the same time in recent years, the clearance rates were 54% in 2010, 72.4% in 2009 and 47.6% in 2008,” he says.

With credit harder to secure following the global financial crisis, Lawless says property values will increase at a much lower rate.

“Investors must be aware of this, and I believe should have a much greater focus on positively geared investment properties rather than the negatively geared ones, which have historically been so popular.”

He says a possible December rate will lead to consumers being more optimistic about housing, a statement supported by Westpac’s Time to Buy a Dwelling Index.

 

 

 

Alistair Walsh

Alistair Walsh

Deutsche Welle online reporter

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