Hope on the horizon for Aussie housing

by Adam Smith29 May 2012

The Australian economy remains volatile, but a new report has revealed some positive signs for the future.

The PRD Nationwide Quarterly Economic and Property Report found there has been an uptick in housing finance, and property declines are expected to slow over the remainder of the year. While the report claimed a quick run-up in property values and sales volumes would be "unthinkable", it claimed that investors may soon return to the market.

Research director Aaron Maskrey said 33.9% of the property market is now made up of investors, and claimed this number could increase as rental yields continue to grow.

"Looking at the macro level property market, the reality is that the rate of decline in values has slowed and could be even stagnant. Investors could now be tempted back into the property market as the rate of decline in values erodes away, while the equity market remains not only turbulent, but has provided returns inferior to fixed bonds over the past five years," Maskrey said.

Investor finance increased in February to a record $6.9bn, up $400m. Spending across the broader housing market increased as well, up $1bn to $20.3bn.

Maskrey said home loan affordability had also increased, giving households some breathing room.

"On average, Australian households now need approximately 32.9% of the family income to service their home loan," Maskrey said.