Rents are expected to grow across all states, index shows
Residential rents are set to increase more than house prices over the next two years, according to the latest index from the National Bank of Australia.
Property professionals surveyed by the bank expect rents to grow by 2.1% over the next 12 months and by 3.4% over the next two years, with rents growing in all states.
However, nationally house prices are anticipated to grow by just 0.4% over the next year and 1.7% over the next two years.
The index report also suggests that the current downward trend in national house prices may be slowing, with prices falling 0.7% in the third quarter of 2012 following a 1.6% decline in the second quarter.
Victoria has the weakest market, with prices falling 1.1%, followed by Queensland down 0.8%, New South Wales down 0.6% and South Australia and Northern Territory both down 0.3%.
Overall sentiment about the residential property market improved over the quarter, with NAB’s Residential Property Index rising four points in the third quarter of 2012 following a fall of eight points in the previous quarter.
Meanwhile, lending for new properties increased in August, according to the latest figures from the Australian Bureau of Statistics.
A 2.6% increase in total housing finance net of refinancing in August 2012 marked the sixth consecutive rise but lending for new homes soared, up 13.9%.
In August 2012 the total number of seasonally adjusted loans increased by 3.3% in New South Wales, by 4.1% in Queensland, by 1.2% in Western Australia, by 3.2% in Tasmania, and by 2.7% in the Australian Capital Territory.
The number of loans fell by 1.2% in Victoria and was down by 2.9% in South Australia and by 6.3% in the Northern Territory.
Harley Dale, chief economist of the Housing Industry Association, the voice of Australia’s residential building industry, said that the figures were encouraging but added that the base for the recovery has to date been too narrow.
‘A recovery in the number of loans to first time owner occupiers appears to be entrenching itself, but lending to the larger trade-up owner occupier market has been losing momentum since March,’ he said.
‘After posting a strong increase in June, the number of loans for the construction of owner occupied dwellings largely flat-lined in July and again in August. Meanwhile, lending for the construction of new investment properties has been trending down since March,’ he explained.
‘Right now the profile for housing finance is a reminder that we have yet to see compelling evidence of either a new home building recovery or of a sustained recovery in the trade-up buyer and investor markets,’ he added.