Reports disagree on direction of property prices
By
Larry Schlesinger
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14/10/2009 10:00:00 AM
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Are property prices going to rise or fall in the next few years? It depends on which influential market report you read.
According to the Housing Outlook report released today by QBE LMI, property prices are set to surge in the next three years with Sydney forecast to grow by 21% by 2012 and Adelaide by 23%, Melbourne by 19%, Brisbane by 15% and Perth and Canberra by 12%.
The strong housing market activity in late 2009 is set to continue into 2010 with ongoing positive incentives for property investors and home owners looking to upgrade to enter the market, according QBE LMI, which cited a strong rental environment and stabilisation of house prices as favourable factors.
"Low interest rates, solid growth in rents and housing shortages will create favourable conditions for a strong recovery in residential property prices in the second half of 2010, through to 2012," said Ian Graham, CEO of QBE LMI.
He also described the housing market outlook as "also positive for those who have recently entered the market, particularly first home buyers".
However this forecast is at odds with the latest JP Morgan/Fujitsu Australian Mortgage Industry report (Volume 10) which mentions "dormant house prices" and an "extremely challenging" outlook for housing volume growth through to 2011.
The report also says that slowing housing growth rates are a "fundamental reflection of the exhaustion of meaningful house price appreciation".
Furthermore, report co-author Martin North highlighted a global house price comparison tool released by the Economist, which shows that Australian house prices have continued on their upward trend while markets like the US and UK have suffered big corrections. The question that remains as yet unanswered is: How much further can they grow?
(To try out the Economist tool for yourself click here)
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Big turnaround in housing from 2011 - While 2010 will be another tough year, according to BIS Shrapnel brokers should expect housing to lead a strong turnaround in 2011
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