FOR those with a vested interest in the residential market and those who are considering buying residential property, some recent figures hint at the future direction of the market.
These have to do with population growth and employment and both have the potential to impact positively on the housing industry.
Australia’s permanent population jumped by 400,000 last year – that’s enough people to populate a city the size of Canberra or Newcastle.
And that, along with the population growth seen over the past several years, suggests good news ahead. More people means higher housing demand, more construction, better job prospects and more sales.
For property owners, this also means price and rental growth.
House prices, in fact, have risen over the past year with modest increases – growth in our capitals rose almost 4 per cent in 2012 and vacancy rates remain tight at under 2 per cent in most major regions.
Top winners were Darwin, up 6.1 per cent; Perth up 6.0 per cent and Sydney up 5.6 per cent. Melbourne followed, up 3.4 per cent; while Brisbane saw a humble 0.6 per cent increase and Hobart fell by -1.8 per cent.
Economic forecasters BIS Shrapnel have released encouraging figures for price growth for the next three years.
Between now and the end of fiscal 2016, BIS think that Sydney’s average values will lift by 19 per cent; Brisbane’s by 17 per cent; Perth by 15 per cent; and Melbourne by 5 per cent.
If you add to Sydney’s numbers its stock decline of -23 per cent so far this year – which brings stock levels on par with those in 2009 – it is easy to see that Sydney’s recovery is well underway.
And that is good news for southeast Queensland because, in a nutshell, “peaks head north”. And they will come, with Brisbane and then both coasts seeing a lot more inquiry from later this year.
Job growth leads to increasing demand and stronger housing markets.
The Sydney market is strong because jobs are being created there. Half of new jobs created in Australia – 160,000 total last year – are in New South Wales and most are in Sydney.
Along with employment is a corresponding measure of underemployment. Currently 911,000 workers are underemployed across Australia, which means that one in every eight employees would like to have more work.
Throughout the last consistent residential market upturn – calendar 2007-08 – underemployment was below 10 per cent.
Queensland is experiencing 14 per cent underemployment, which helps to explain why the state has paused at the start of a recovery.
Theory strongly suggests that Queensland’s residential markets should be recovering, but labour utilisation must be improving and business profitability must be rising before the housing market recovers in earnest.
Astute property investors are keeping a keen eye on the Queensland market.
For more information go to www.matusik.com.au