Half of First National agents expect prices to rise, but nowhere near the 5% to 7% predicted by some economists

Half of First National agents expect prices to rise, but nowhere near the 5% to 7% predicted by some economists
Half of First National agents expect prices to rise, but nowhere near the 5% to 7% predicted by some economists

Highlighted by the increased proportion of homes selling for more than double their initial purchase price, a survey of First National estate agents has found that 48% expect property prices to rise.

However it is unlikely there will be any solid upturn in house prices before 2015, due to cautious spending and borrowing behaviour, the survey found.

The First National Real Estate 2013 Property Market Outlook Mid Year Outlook, released today, surveys the 400-plus member network and draws on their experience at a grass roots level, providing insight to what they anticipate the market will do in their area for the rest of the year.

‘’Our members are expecting the second half of the year to strengthen even further, with the revival experienced in the first half continuing,” says First National CEO Ray Ellis.

“Although pockets of our membership anticipate soft trading conditions for the next few months, a clear majority is optimistic that the federal election will bring a change of government as well as a positive change in their property markets.”

Interest rates are expected to remain low for some time, with 51% of members expecting them to fall further.

The report highlights the impact of ongoing low interest rates on fixed rate mortgages, which are expected to become more popular with home owners over the coming six months, according to 86% of members, with some saying home buyers may hold off longer, expecting rates to fall further still.

“The challenge of low interest rates is that they could lead to a quicker than expected rise in house prices as households take on higher levels of debt,” Ellis says.  “The associated boost to wealth and sentiment could, in time, generate stronger than expected consumption growth.”

House prices across the nation are slowly trending upwards, the agents say.

But price growth is expected to be modest, according to Ellis, and nowhere near the 5% to 7% predicted by some economists.

At the state level, first home buyers are expected to be the most active market segment in Western Australia and the Northern Territory. However, in New South Wales, South Australia, Victoria, the Northern Territory and Queensland, people upgrading their properties or buying investments are anticipated to be the most active.

Property sales volumes should remain at current levels, but for some states such as New South Wales, Victoria and the Northern Territory, they will begin to trend upwards.

“There is potential for the number of homes for sale to drop off at election time, but volumes should increase once the federal government has been decided,” Ellis says

The number of homes for sale is trending downwards, which may be partially responsible for the current high auction clearance rates in the leading indicator states of Victoria and New South Wales.

“Auction clearance rates have been consistently higher than 60 per cent nationally, and around the 70% mark in the key Melbourne and Sydney markets,” Ellis says.

“This is placing additional upward pressure on prices.”

Almost 80% of First National Real Estate members expressed confidence their agency business would grow in the second half of the year.

Some 37% of First National agencies expect they might employ additional staff members.

 

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