Modest, patchy housing market recovery forecast for 2012: Monique Sasson Wakelin
A modest, patchy housing recovery is on the cards for 2012, with houses and apartments in suburbs close to CBDs and period houses the best placed for growth, according to Monique Sasson Wakelin, managing director of Wakelin Property Advisory.
“The elements are in place for moderate property price growth in 2012 in our capital cities,” she says. “Growing incomes, falling interest rates, improved affordability and low inflation and unemployment will underpin demand. Where supply remains constrained price growth will follow.”
Sasson Wakelin identifies suburbs two to 12 kilometres from the CBD in Sydney, Melbourne and Brisbane and one to five kilometres from the CBD in other capitals as those where supply-constrained markets are most prevalent.
“Despite efforts to encourage in-fill developments in our inner suburbs, the thin volume of new supply is insufficient to match increased demand deriving from a growing population,” she says.
“The [supply] gap is most acute for period housing. By definition, no more Victorian or Edwardian houses are being built and neither are Art Deco or 1930s to 1970s apartments. This architecture is highly sought after by home buyer and investors alike.”
Wakelin is less optimistic about Melbourne high-rise apartments and outer-fringe areas. “Both the outer-fringe and the high-rise sectors in Melbourne suffer from a glut of excess supply over demand due to the full pipeline of new developments in these areas,” she says. “There may be little or no capital growth in these areas in 2012.”
She does not anticipate a dramatic start to the 2012 market. “Don’t count on fireworks or bidders competing aggressively in February when metropolitan auctions recommence.
“After 18 months of softness in the property market, understandably many prospective buyers are looking for a signal that no further price cuts are likely before they jump in.”
Sasson Wakelin believes a gradually improving auction clearance rate may be that sign in the Melbourne market.
“The clearance rate has been hovering in the low 50s for several months in Melbourne. If it starts creeping towards and beyond 60%, this may be the cue for others to buy. We may see an orderly rush to the entrance of the property market in April and May.”
“Barring the economic or natural disasters that plagued us in 2011, I envisage moderate capital growth of between 2% and 5% for metropolitan Melbourne, most likely arising in the second half of 2012.”
The major risk factor facing property in 2012, she says, remains international economic conditions.
“Should the eurozone crisis deteriorate then this may see capital growth deferred and even result in some further softening in prices. However, I would expect the inner and middle suburban established property markets to remain insulated because of their innate resilience against economic shocks and further Reserve Bank rate cutting.”