With the exception of Sydney and Canberra, where there was only minimal growth, median house prices in Australia’s capital cities fell over calendar 2011 as a combination of higher interest rates at the start of the year, slowing economic growth, and weakened purchaser activity upon the expiry of the First Home Owner's Grant Boost Scheme, all conspired to dampen demand. 

While there have been pockets of buoyancy in regional centres underpinned by record levels of investment in the resources sector, the flow on economic effects of this investment have not yet permeated through to the capital cities, where price growth and construction has continued to remain weak in 2012. However, interest rates were reduced towards the end of 2011, and notwithstanding recent out-of-cycle rate rises, the falls in prices have resulted in affordability improving. This will be assisted by the likelihood of further cuts to interest rates in 2012. 

On the one hand, questions still remain on the prospects for the boom in resource investment driving growth in the capital cities. On the other hand, affordability is slowly improving and the declines in construction are seeing a rising underlying deficiency emerge in a number of states. What are the prospects for a recovery in economic conditions? Will investors continue to return to the market? Will the nascent recovery in first home buyer demand continue? What does this mean for the price outlook over the next three years by capital city? Will a two tiered recovery emerge similar to the two tiered economy?

Residential Property Prospects 2012 – 2015 provides a comprehensive review and the outlook for residential property in each capital city and includes price forecasts for the regional areas of Cairns, Townsville, Sunshine Coast, Gold Coast, Newcastle and Wollongong through to June 2015. Understand what is happening with the key fundamental drivers of demand and supply: 

•  the economic outlook and business conditions
•  interest rate movements and timings, housing loan affordability
•  impact of Federal and State government incentives
•  net interstate and overseas migration
•  underlying demand and dwelling construction
•  stock deficiencies or oversupply in each market
•  trends in rental yields and forecasts for rental growth
•  annual median house price forecasts for capital cities and above regional areas
  

An annual subscription includes the main report (published June), along with an Update report in December. Your organisation will also have access to our team of residential property consultants and analysts throughout the year to further discuss forecasts, content or methodologies. Subscriptions are for a hard copy of the report only.

Joy Xenita

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