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While most brokers feel the property market has some way to go before picking up experts say 40 year low interest rates and government incentives have put the wheels in motion for a slow, but real upswing in the property market.
Of the 598 respondents to the latest Mortgage Business’ weekly straw poll, a narrow majority of 56 per cent of brokers believe that the property market has not yet bottomed out while 38 per cent feel that we have turned the corner.
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The property market was hit hard in 2008 as the global financial crisis took its toll on buyer confidence but in 2009 there are early indications that conditions are improving.
In the year to January the median house prices slipped by just over one per cent, according to Residex, although falls were more substantial in some areas of the country.
Louis Christopher of Adviser Edge told Mortgage Business that indications are that the lower end of the market may have bottomed out, though he warned that recovery for the top end could still be some way off.
"There are some strong signs that the lower end of the market is now holding, as a result of first home buyer incentives, rate reductions and other government initiatives,” he said.
Jason Anderson of BIS Shrapnel agreed; he said a surge in first home buyer activity would have positive ramifications for the lower end of the market.
“We are forecasting 180,000 first home purchases in this calendar year – that’s more than the peak recorded in 2002 when the first home owner grant was first introduced.
First home buyer activity won’t just stimulate the bottom end of the market but should also have a domino effect on the middle market, according to Mr Anderson.
Mr Anderson also pointed out that unemployment would not necessarily prove fatal for prices; high unemployment after the recession in the early 90s did not see property prices plummet, he said.
“Substantial rate reductions in post recession 91 and 92 saw property prices increase by 3 to 5 per cent.
“The great majority of households aren’t impacted by unemployment, but interest rates,” he said.
Warren McCarthy, CEO of realty group LJ Hooker tipped the $300,000 to $600,000 markets to pick up first – particularly those close to CBDs and in strong regional centres.
“With demand for properties in this price bracket strong, a shortage of stock will eventually see prices improve.”
