House prices in Australia will have variable results next year with some key cities set for improvement while others might struggle in raising the median values.
Experts predicted this forecast due to rising interest rates and the First Home Owner Grant removal. These developments will have a big impact on the lower end properties. However, middle and upper end properties will get a boost from buyer trading, population, immigration growth and a steady economy.
Experts also foresee that the areas that will have the highest property price hikes are the places where the First Home Owner Grant has been more popular. This development is possible due to the domino effect that it can bring to the market.
John Edwards of the property research company Residex stated that a steady growth is possible for the $500,000-$600,000 properties in Melbourne and Sydney for the First Home Owner Grant has become popular in these cities.
He also predicted that property prices in Melbourne will go up by around six to seven per cent and this can make rental prices rise as well. Edwards also added that since that the value of the lower end properties grew 15 per cent in 2009, owners can possibly use that equity to trade up for middle end properties.
Meanwhile, Matthew Bell of the Australian Property Monitors predicted that the prices of the middle end properties throughout the country will go up by seven to ten per cent. He also added that once interest rates reach the 7.5 – 8 per cent mark, it will not be a negative aspect in the escalating property values.
Bell pointed out that the property price fall from March 2008 to March 2009 is due to the global financial crisis and not on the rates.
On the other hand, AMP Capital Investors Chief Economist Shane Oliver stated that property prices have already been high for six to nine months and that it is difficult to raise property prices for it can take out the affordability of some properties.
Tags: home loan, interest rates
