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Sydney house prices to soar 20 percent by 2013

BIS Shrapnel is forecasting Sydney house prices to increase up to 20 percent by 2013, with other capital cities due to increase similarly over the period.

Sydney House PricesBIS Shrapnel’s Residential Property Prospects report 2010-2013 examines property prices across Australia and draws conclusions about where prices will head over the coming 3 years. The Residential Property Prospects report expects increases of between 11 and 22 percent across Australia’s Capital Cities with Perth topping the results.

Predictions of house price increases contained within the report contrast with findings that lending activity is already easing in 2010. First-home buyer demand in the March quarter of 2010 is down by 44 percent on the same period last year, and upgrader activity (people already in the property market, selling and moving to more expensive properties) has plateaued in 2010.

Perth is expected to see house price growth of 22 percent over the three years, with Sydney and Adelaide growing by 20 percent over the period.

BIS Shrapnel senior project manager, Angie Zigomanis, told media that they expect the Australian economic recovery in 2010 to underpin renewed demand through 2011 as investors return to the market.

“we expect rising confidence in the prospects for an economic recovery in 2010, so investors are likely to return in greater numbers, attracted by increased rental returns and low interest rates.” Mr Zigomanis said.

In 2010 however, BIS Shrapnel predicts that subdued demand will continue as a result of successive increases in interest rates by the RBA combined with the winding back of the First Home Buyers Grant scheme at the end of 2009.

“Obviously anyone who could purchase in 2009 to take advantage of the grants and lower interest rates at the time did,”

“So we’re seeing a lot of those people who were pulled forward into 2009 obviously not there at the moment.” Mr Zigomanis said.

BIS Shrapnel forecasts official interest rates to increase by 50 basis points over the next 12 months and increase a further 50 in the 2011/12 financial year.

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David Olsen

David Olsen

An undercover economist and a not so undercover geek. Politics, business and psychology nerd and anti-bandwagon jumper. Can be found on Twitter: <a href="http://www.twitter.com/DDsD">David Olsen - DDsD</a>

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