Australian house prices may rise by up to 20 per cent over the next three years, despite interest rates possibly reaching 9.1 per cent.
The QBE Housing Outlook 2010-13 survey compiled by BIS Shrapnel forecasts house price growth of between 9 and 20 per cent in Australia’s capitals over the next three years, the result of a stronger economy and undersupply of housing.
Prices in, Sydney, Perth and Adelaide are forecast to grow by up to 20 per cent and Brisbane and Hobart are expected to rise 15 and 13 per cent respectively.Strong growth in Melbourne house prices last year and early this year combined with a higher level of housing construction – more than in any other state – and worsening housing affordability would slow the city’s price growth over the next three years to 9 per cent, below that of all other capitals, the BIS report said. Darwin and Canberra will also grow more slowly.
”We expect price rises will be underpinned by a deficiency of dwelling stocks across most capital cities, which in turn will lead to tight vacancy rates and solid rental growth, flowing through to increased investor demand,” said QBE chief executive Ian Graham.
BIS Shrapnel said strengthening economic conditions and an undersupply of housing in most states should provide substantial upward pressure on house prices. ”Economic growth is also forecast to continue to accelerate, fuelling employment and income growth,” the report said. ”Price growth is expected to generally peak in 2012-13 as economic growth also peaks.”
Demand for housing from first home buyers was not expected to improve until next year.
In the report, BIS Shrapnel forecasts that variable interest rates will peak at 9.1 per cent in 2013. ”This will ultimately have a slowing effect on the economy and prices, although there may be one last gasp for price growth in some cities in 2012-13 where there is a large deficiency, or affordability is not strained,” the report says.
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