Indicators strong for property market recovery in 2012

Indications that a property market recovery is likely in 2012 are strong, although it will be a slow and gradual process, with first home buyers beginning to stir, but not fully confident to part with their hard earned savings, and investors having already capitalised on prime market conditions.

According to First National Real Estate Gunnedah principal, Lesley, this is the picture based on expectations of interest rates, market movements and local area member knowledge, underpinned by improving consumer sentiment as detailed in First National Real Estate’s 2012 Property Market Outlook released this week.

“Home prices bottoming out, falling interest rates and improving affordability are all working together and may prove the stimulus the market has been waiting for to get it moving again,” Lesley said.

“In turn, increased interest and activity in the property market will see it strengthen further especially with investors who have already shown signs of gaining confidence at the end of 2011.”

Buyer confidence should improve in the next 6 months, as a result of lower interest rates, improving local market conditions and a more stable global economy.

The key challenges for the Australian property market in 2012 will be focused on sustaining a strengthening consumer confidence, which are at the mercy of ongoing stability in global economies and job security; government policy and legislation (especially the introduction for the carbon tax and reduced government assistance for first home buyers); and interest rate movements.

While demand is still expected to remain relatively soft into 2012, a recent sharp rise in Westpac’s time to buy a dwelling index may be the cue for a housing upturn.

“This will, however, be dependent on ongoing interest rate cuts, job security and resulting consumer sentiment,” Lesley said.

Interest rates are expected to drop further with rate cuts of up to 0.5 per cent, although some say it could be as much as 75 to 100 basis points.

Any future interest rate cuts are expected to stimulate buyer activity as confidence improves and refinancing options broaden, ultimately strengthening the property market,” Lesley said.

With the Australian housing market now affected by daily international updates and commentary, confidence can change at a moment’s notice.

“Our members believe the strongest growth in their regions will come primarily from upgraders, followed by investors, then retirees and lastly from first home buyers,” Lesley said.

“Into 2012, the commercial property market will continue to be a mixed bag, very reliant on the area and local market conditions, but the majority of members said they expected the market to stabilise,” Lesley said.

According to First National Commercial members, solar power remains the most popular energy efficient feature in a commercial property, making it more rentable.

Water recycling, the ability to open windows and motion sensor lights are also sought after energy efficient features.

Growth in commercial property markets is expected to come mainly from the heavy and light industrial sector, followed by the office market and medical industry.

Improving housing affordability and interest rate cuts should inject some much-needed confidence into the regional housing market.

“Over 2011, the regional property markets have been influenced by economic factors such as the strength of the Australian dollar value, commodity prices, demand for Australian products and nervousness around job security,” Lesley said.

“The regional market has stagnated to some degree but this is expected to steady into 2012 as confidence slowly starts to build, eventually returning as the year progresses.”

For further information or to receive a copy of the 2012 Property Market Outlook, contact Lesley, principal on 6742 0266.

Source:   Namoi Valley Independent, 02 February 2012

First National Real Estate Gunnedah