House prices in capital cities will improve by as much as 22 per cent over the next three years, according to property industry analyst and economic forecaster BIS Shrapnel.
The resource-rich states of Western Australia and Queensland are expected to take the lead, followed by New South Wales and the Northern Territory.
Conditions are predicted to be the strongest in Perth and Brisbane, where prices are estimated to increase by 22 per cent and 20 per cent respectively within three years.
Sydney and Darwin prices are predicted to increase by around 15 to 17 per cent and a substantial deficiency of dwellings should maintain solid rental growth in the two cities.
Senior manager and study author Angie Zigomanis says things should start to pick up across the entire market in 2013.
“With the local economic outlook becoming more positive and some stabilisation and improvement overseas, purchasers are forecast to wade back into the market in greater numbers, translating to greater sales volumes and a pickup in price growth over 2013/14 and into 2014/15,” he says.
“While overseas economic conditions are expected to remain challenging, improving local economic conditions should move to the forefront of people’s minds and begin to have a more substantial impact on purchaser sentiment.
“At the same time, the increased investment and spending in the mining and related sectors of the economy should increasingly flow through to the domestically focused non-mining sectors of the economy, leading to stronger employment growth.
“The increased confidence is forecast to encourage more first homebuyers into the market and existing occupiers to upgrade. Investors should also increasingly enter the market once there’s evidence that prices have bottomed out and will also be supported by solid rental growth.”
Improving domestic conditions should also see prices stabilise in Melbourne, Adelaide, Hobart and Canberra over the next 12 months. However, with less exposure to the better performing resource sectors of the economy, these states are expected to continue to experience challenging economic conditions.
