The housing market is tipped to gather steam in 2012, after cautious consumers eschewed buying in favour of renting at the end of last year, pushing rental prices higher across the country.
New data by Australian Property Monitors released today showed a 1.1% quarterly rise in rental asking prices, driven by the underlying shortage of housing in most Australian capitals. The Melbourne market was flat.
On the supply side of the property market, housing listings decreased 1% in December, as sellers removed their listings over the Christmas period.
Andrew Wilson, senior economist at Australian Property Monitors, says falling consumer confidence led to weaker property sales, leading to higher rental prices.
“Increasing competition for properties, particularly from home buyers unable or unwilling to enter the property market has resulted in rising rental prices over the December quarter for both houses and units,” he says.
“After flat results over the previous two quarters, landlords have capitalised on the high competition in the marketplace, and are charging a premium for their properties.”
“Sales markets are aligned with confidence – and we’ve seen a lot of low confidence in terms of buyers.”
The largest increases across the country were in units, as they tend to be cheaper for renters and plentiful in metropolitan hubs.
Canberra experienced the largest growth in rental asking prices, up 6.4%, with Brisbane and Perth also growing at 2.7% and 2.6% respectively.
Meanwhile, SQM Research says housing listings decreased by 1% in December, as sellers removed their listings over the Christmas period.
Despite the December fall, housing stock increased 18% in 2011, SQM Research says. This was a decline in the rate of growth from 2010, where it increased by 45%.
SQM Research managing director Louis Christopher says the fact that listings were rising despite falls in house prices showed many of those selling a property were uncertain the falling prices in the market would improve soon.
“If you were a potential seller, and there was a risk house prices would fall even further, you would sell,” he says.
“Many sellers are realising conditions could get even worse.”
Despite this, both Christopher and Wilson expect confidence will return to the housing market in 2012, which according to Wilson should lead to a fall in rental prices.
“It is expected that as the housing price cycle bottoms out, and confidence returns, we will see increased buyer activity in Sydney, Perth, Brisbane and Canberra through 2012 that will take some pressure off the rental markets in these capitals,” he says.
An exception to the rental increases was Melbourne, which Wilson says remains “Australia’s most tenant-friendly rental markets”.
This is due to the large residential developments happening in the city, a factor Wilson expects to continue.
“I think it will be exacerbated over the next year or so when we have a lot of new units come into the markets, and the boom in inner-city high-rise units,” he says.
“It just increases the stock – the rental and investor stock – and that will cause less competition for rental properties.”
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