Current Property Market in Australia
By Alex Henderson, Prosper Group
Recent capital growth rates and median prices
Capital growth over the past 12 months in most Australian capital cities has been impressive. In most Australian capital cities there are not enough properties being built to cater for the growth in population; so the demand from buyers, especially in metropolitan areas, has exceeded the supply of properties. Along with interest rates being historically low compared to the long-term average, this has been fuelling the growth in property prices.
Australia has weathered the storm of the Global Financial Crisis (GFC) very well. The Australian government had plenty of money accumulated from our booming resources trade with Asia and such they were able to shelter the economy by introducing various stimulus packages into the economy. This government stimulus, along interest rates reducing to 30 year lows, kept employment levels high and fuelled demand for real-estate.
The Average Median Price and % Change Year on Year
|City||Median Price||% Change in index value,
year on year
(*Hobart results are based on final April data; based on settled sales over quarter;
based on capital growth to May 2010) Source: RP Data
Paying $0 Stamp duty in NSW
The NSW Government delivered the 2010-11 Budget with a number of key wins for the property industry. As of July 1, stamp duty has been abolished for the next two years for any purchasers buying a home worth up to $600,000, prior to the commencement of construction (off the plan). This is a potential saving of up to $22,490.
There has been be a stamp duty cut of 25 per cent or up to $5,623 for anyone buying a new home already under construction or newly completed worth up to $600,000.
Stamp duty will also be eliminated for the next two years for anyone over 65 who sell their property and move into a newly built dwelling worth up to $600,000. This is being done as an incentive to encourage empty nesters to down-size to smaller homes.
The outlook for the next 1 2 years
Property is a medium to long term investment and the housing cycle in Australia is generally over a 7-10 year period; during which there are always high growth spurts, lows and steady patches.
In recent weeks we have seen a reduction nationally in auction clearance rates, going from 74% for April to around 68% for May.
Vendors have been riding high with expectation and setting high reserves at auctions. With interest rates starting to rise, buyers are now looking carefully at their budgets and being more discerning about the price that they pay for property.
We expect to see more moderate levels of price growth in capital cities over the next two years.
The current cash rate as of July is at 4.5% and the RBA has indicated that the target rate is 4.5% to 5%. RBA Governor, Glenn Stevens said that the RBA's current setting of rates was appropriate for the near term. He said interest rates to borrowers are around their average levels of the past decade.
For further information please visit www.prospergroup.com.au.