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Published 24 January 2013 01:28, Updated 29 January 2013 12:24
Hot: In Melbourne, Hawthorn is catching the spill from Toorak
Property investors around Australia hope 2013 will be the year that house prices start rising from the canvas. But fragmentation in the market means strong growth will be limited to specific areas; buying in the wrong part of town will be especially costly in 2013.
Senior economist at Australian Property Monitors Andrew Wilson says the fragmenting state of the property market is one of the big lessons from 2012. “Even through we have had a [recent] boost to the market, it hasn’t had a generalised impact.”
Australian Property Monitors is expecting a rise of 3 to 5 per cent in the national median house price index this year, but results will vary widely across the country.
The research firm is tipping zero growth in Adelaide and Hobart, 0 to 3 per cent growth in Canberra and Melbourne, 3 to 5 per cent growth in Brisbane and Sydney, and 5 to 7 per cent growth in Perth and Darwin.
Growth rates are also varying widely within suburbs, and experts across the country are noticing divergent trends.
“You need to analyse the market in terms of local [price] drivers,” Wilson says. “Some market segments in different capital cities have gone in different directions.”
Principal and buyers agent from Sydney Property Finders Dennis Kalofonos says prices are beginning to vary widely from door to door.
“We have seen the market fragment more and more over the last 12 months,” he says. “It’s not just particular suburbs but particular types of houses within those suburbs.” Kalofonos says houses worth between $1.5 million and $2.5 million in the eastern suburbs are most in demand. “But beyond $2.5 million properties become very difficult to sell because those people are in upper management positions and they are concerned about job security and the economy in general.”
Divergent opinions about the state of the economy are contributing to divergence in the property market, Kalofonos says. He also believes that changing lifestyle preferences are having an impact.
“Three-bedroom apartments are going through the roof,” he says. “Rather than going out and buying a quarter-acre block 40 minutes from the city, many young families would rather buy a three-bedroom apartment close to the city.”
In property hot spot Darwin, Robert Higgins says the market is exhibiting different behaviour.
Higgins, a sales agent and special projects manager for LJ Hooker in Darwin, says limited stock and strong demand are still leading to widespread price rises.
Despite some poor monthly results in December, Darwin was the stand-out performer in 2012. House prices rose by 7.6 per cent for the year – the best result by any capital city.
“Good established homes [in Darwin] sell straight away,” he says. “But anything that is cheap also does well because of the affordability crisis.”
The Perth market, which like Darwin has benefited from the mining boom, is also in line for a strong 2013. The chief executive of residential apartment sales firm MLG Realty, Marcus Gilmore, expects demand to stay strong this year – especially at the lower end of the market. He says there is an undersupply of properties within the Perth metro area, which should help support prices this year.
“Realistically, we should have had a price jump at the end [of 2012],” he says. “But negative sentiment has probably staved off a bit off that growth. There is pent-up demand there which will come through this year.”