Properties priced between $700,000 and $1 million are likely to show the greatest growth, according to RP Data.
The company’s director of property research, Tim Lawless, told Mortgage Business that the middle property market would be the best performer over the coming 12 months.
“The affordable end of the market had a very strong run in the first half of 2009, driven by a surge in demand from first home buyers,” Mr Lawless said.
“Based on housing finance data it can already be seen that first home buyer demand is winding back, but non first home buyer commitments have continued to improve.”
Mr Lawless’ comments come after a recent straw poll found real estate agents expect the mid property market segment to perform the best over the year ahead.
Of the 314 respondents, 60.6 per cent said the mid market would be the top performer, followed by the lower segment with 30.9 per cent of the votes. The least likely to improve was the upper segment – with only 8.9 per cent.
Mr Lawless said while demand for the mid market had been fairly low to date, upgraders and non first home buyers should become more active in the coming six months.
“Interest rate rises and an upwards creep in unemployment (or more importantly underemployment) will balance demand as we move into 2010, however rates are likely to remain well below the highs of 2007/08 and unemployment has remained well below expectations,” Mr Lawless said.
“The real driver in the market is likely to be the ongoing demand/supply imbalance; population growth figures released this week show the number of residents in Australia increased by 439,000 over the 12 months to March – the highest number on record.
“At the same time housing starts remain at historical lows. This imbalance will continue to place upwards pressure on housing prices and vacancy rates are likely to remain low which will increase rents.
“I wouldn’t expect double digit growth over the coming year. Under ‘normal’ market conditions we should expect growth rates of between 5 and 10 percent per annum and this is probably in the realm of what we will see in 2010.”
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