Perth and Sydney prices to rise 5% in 2012: Angus Raine

Investors and cashed-up first-home buyers are set to push up Sydney and Perth property values by up to 5% in 2012, Raine & Horne CEO Angus Raine has forecast.

According to Raine, price rather than the traditional real estate mantra of “location, location, location” will drive the buying decisions of investors and owner-occupiers over the course of the year.

“In Sydney, the market between $400,000 and $650,000 will continue to show positive signs in 2012, with investors re-entering the market, replacing the expected shortfall of first-home buyers due to the end of the stamp duty concessions on existing homes,” Raine says.

“It’s a misnomer that real estate investing is only about location, location, location.

“Price, price, price will drive the buying decisions of those owner-occupiers and investors considering homes in Sydney below $650,000 next year.

“As such, it’s also fair to expect that traditional apartment markets, where investors compete with first-home buyers, such as Eastwood, Ashfield/Burwood, Hurstville and Dee Why, will show plenty of form in 2012,” he says.

He also predicts investment activity in inner-ring suburbs such as Bondi, Newtown and NeutralBay, with sales volumes expected to increase markedly from the second quarter of 2012 onwards.

In 2011, regional locations outperformed the capital city market (according to RP Data- Rismark), with prices falls of 2.5% compared with big-city falls of 3.5%

Raine expects “regional centres with decent facilities for green- and sea-changers” will enjoy some capital growth.

“Baby boomers will look to regional centres that not only have excellent health and lifestyle facilities, but also to towns such as Tamworth, Orange and Port Macquarie, which have airports that make it easier for friends and families to visit,” he says.

Sean Green, operations manager at Raine & Horne, expects Brisbane house prices to stabilise in 2012 with some parts of the market already showing signs of recovery on the back of the interest rate cuts in November and December.

“It’s fair to say that 2012 will be the first time in a number of years that Brisbane real estate values won’t fall,” says Green.

Green says investors have their sights focused on inner-ring suburbs such as Fairfield and New Farm.

According to the Raine & Horne New Farm office, 20 groups inspected a refurbished three-bedroom apartment at

5/84 Moreton Street

, New Farm in early December on the market for $399,000 and with rental expectations of $400 per week.

Outside Brisbane, Green nominates the Noosa hinterland as a potential growth star in 2012.

“The Noosa hinterland is about 26 kilometres from the Maroochydore airport, which is an important consideration for baby boomers.”

In Perth, Raine & Horne is predicting 5% growth for Perth suburbs such as Cannington, which has relatively easy access to Curtin University of Technology and the Kwinana Freeway, as well as affordable Kenwick and Kelmscott in the south east.

“We also expect to see more investors in the North Perth market in 2012,” says Green.

“A recently renovated two-bedroom home unit at

10/6-8 York StreetInglewood

, which is listed with Raine & Horne North Perth, attracted strong investor attention in December.”

Over the last few weeks of 2011, there were more than 40 enquiries about the

York Street

apartment, with about 60% of enquiries from investors seeking healthy rental returns, according to Green.

“It’s a completely renovated apartment in a traditional 1970s red-brick block, which is on the market for $349,000 and is expected to generate a weekly rent around $350,” he adds.