The rise in residential property prices in Australia is expected to slow in the last three months of this year and into 2011, according to a new survey.
Real estate price growth over the last year has ranged between 10% and 12% nationally, according to varying measures of the market. Only the major markets of Sydney and Melbourne have achieved double digit growth.
And while some people are still confident of further price increases, more are now expecting price falls, the survey by Westpac and the Melbourne Institute shows. Sentiment is consistent with recent data showing a slowdown in a broad range of housing indicators, with house prices falling over the last quarter.
The Westpac-Melbourne Institute Consumer House Price Expectations Index declined to 51.1 in October, from 58.8 in July. The index is now well below its peak of 80.3 in January.
In October, 63% of consumers expect price increases over the next year, down from 70% in July, the survey found. On average, consumers expect a rise over the next year of 2.6%, down from 3.6% in July and 5.7% in April.
Matthew Hassan, senior economist at Westpac, said consumers have continued to pare back their expectations for house prices despite interest rates staying on hold since May. The general consumer outlook still points to a soft landing for the housing sector in general.
‘The fact that most still expect prices to rise also suggests that those looking to sell properties will be more inclined to postpone selling until a later date than accept materially lower price offers now,’ explained Hassan.
Perth, Sydney and Adelaide are predicted to be the country’s strongest real estate markets in the next three years, according to a separate report. While a lack of economic confidence in Queensland is expected to prohibit capital gains in Brisbane.
According to the QBE LMI Australian Housing Outlook report researched and written by BIS Shrapnel, property price increases of about 20% on average are predicted in Sydney, Perth and Adelaide through to 2013.
More modest house price growth is expected in the three years to June 2013 in Brisbane, where prices will rise by 15%. Hobart prices are expected to increase 13%, Darwin and Canberra by 12% and Melbourne just 9%.
‘There is a greater degree of caution, but people continue to surprise me by what they are prepared to pay for properties, not just in the top but in the middle end,’ said BIS Shrapnel managing director Rob Mellor.
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