Promising property returns on the horizon

by Alex Henderson, Prosper Group

Low interest rates, solid growth in rents and housing shortages are evident in most Australian property markets. As affordability for many property buyers improves along with the outlook for the economy, property buyers are looking to purchase well positioned properties that have the best chance of capital growth over the next few years.

Australian house prices will rise by nearly 20 per cent over the next three years, according to BIS Shrapnel regardless of the first home owners boost ending.

BIS Shrapnel’s Angie Zigomanis said activity in the lower end of the market - buoyed by the boost to the first home owners grant and low interest rates - were generating “green shoots” of recovery.

Their report says average house prices in most capital cities will grow by between 11 and 19 per cent over the next three years. The first home owners grant combined with low interest rates would kick start further activity in the “upgrading” market.

“If the first home buyers are in the market buying, someone is selling it to them,” he said.

“We’re expecting that increased first home buyers activity to lead through to stronger upgrading demand for people upgrading to their next property,” he said.

Mr Zigomanis said once the (boost to the) first home owners grant expires, and first home buyers drop back out of the market, there will be enough activity in the market so it becomes self-sustaining.

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