House prices are expected to soar 20 per cent over the next three years, a new report has found.
According to QBE LMI’s Australian Housing Outlook report, improving economic conditions are expected to facilitate further house price growth in Sydney, Adelaide and Perth.
More moderate growth is expected in Brisbane and Hobart, where affordability is not as strained and there is no sustainable dwelling deficiency.
QBE LMI chief executive officer Ian Graham said the Australian property market gained momentum in 2009 on the back of the First Home Owner’s Grant Boost Scheme (FHOGBS) and record low interest rates.
However, the expiry of the FHOGBS at the end of 2009 and several interest rate rises between October 2009 and May 2010 effectively moderated house price growth in the first half of 2010.
“The decline in first home buyer demand in the first half of 2010 is primarily due to first home buyer activity being pulled forward into 2009 because of the FHOGBS. However, demand is forecast to return to more normal levels, believed to be around 130,000 to 140,000 loans approved, in 2011” Mr Graham said.
"Future median house price rises will be underpinned by a deficiency of dwelling stock across most capital cities, which in turn will lead to tight vacancy rates and solid rental growth, flowing through to investor demand.”
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