It looks like we will see the property market finally take off again next year. Of all the places, Sydney's West looks like the place to buy.... Time to call the mortgage broker before the "new year boom" kicks off.
Daily Telegraph:
THE dark clouds over Australia's depressed housing market will lift next year - and Sydney will be leading the property boom.
Helped by a steady stream of interest rate cuts, and the precious lure of more to come, economists are predicting property prices to jump by as much as 5 per cent in 2013.
And it is in Sydney's aspirational western suburbs where the biggest rises will be seen. A rising tally of loan applications and a late surge in building approvals has the big-bank economists believing in an awakening for the idle housing construction industry.
Such is the positivity around the housing market, economists at investment bank UBS predict at least 15,000 more new homes will be built across the country in 2013 than were constructed this year.
That will result in 150,000 new homes being built next year - finally back to a level considered "normal".
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The smart money is heading west IF it were not for the performance of Sydney's west during 2012, the overall property market in Sydney would not have retained its buoyancy. The bulk of those homes will be built in NSW, which will receive the biggest gain from interest rate cuts.
The only anchor that tempers any belief in a full-scale housing renaissance appears to be the national economy, which continues to retreat with seemingly no base in sight. But even a limp economy won't be enough to stifle the housing sector.
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"The big X Factor for NSW, the big positive for 2013, will be the housing sector. It's been a long time coming," CommSec economist Savanth Sebastian said. "We are saying 5 per cent growth nationwide in prices. Credit growth has been subdued for some time, but some of the numbers we are looking at internally at CBA show a significant pipeline of home buyers."
Potentially driving the lift in pre-approval loan applications is the fact Australian homeowners have more cash than at any time in the past decade. Net household financial wealth per capita rose from $65,887 to $69,442 in the September quarter, with 23 per cent of that equity held in cash or deposits.
Since home loan rates began falling in November 2011, homeowners who have an average $350,000 mortgage are also now saving $3641 a year, and could easily bank a further $1042 if, as most economists predict, official RBA rates slip to 2.5 per cent.
"Migration is also back at a 3 1/2-year high, and more migrants means more homes will be built. But what is going to be the real driver of growth is rental yields. Because vacancy is back under 2 per cent, rents will go up, and then people look at the yield on those properties and say 'well, this home should be worth more'," Mr Sebastian said.
Chief economist at the National Australia Bank, Alan Oster, said there was a sense of relief within the financial sector that house prices - and more importantly for the future, housing construction - had clearly bottomed and was making its move north.
Based on the NAB forecast that official interest rates have another 0.5 per cent to fall, the bank predicts property prices will surge between 5 per cent and 7 per cent in 2013.
It's the same message of hope being communicated at investment banks JP Morgan and UBS. The latter's economist Scott Haslam predicts an 11 per cent rise in construction.
AMP's Shane Oliver deems even that figure too conservative: "We anticipate a 15 per cent rise in construction."
