After three years of declining growth, the latest Residential MarketView report from CBRE suggests that the Australia residential market is finally on the road to recovery.
CBRE’s Regional Director of Residential Valuations, Tom Edwards said an improvement in sales volumes and other factors are suggested to be responsible for the market’s growth.
“A low interest rate environment, modest improvement in building approvals, an increase in population growth, improving rental yields, expanding buyer enquiry levels, sales volumes improving and recent equity market growth are all necessary for a market geared towards recovery,” Mr Edwards said.
Sydney, Melbourne, Perth and parts of South East Queensland have shown the most improvement.
CBRE recorded that vacancy rates in Sydney are now at a low 2% and building approvals are showing positive growth after a long period of low building activity.
Sam Reilly, a member of CBRE’s Global Research and Consulting team suggested stable economic conditions are improving the supply shortages in residential building activity, eliminating the challenges previously associated with planning regimes and obtaining credit.
Continuing this positive growth, sales volumes and price performances in Victoria are starting to improve.
In particular, Melbourne is showing a great improvement in buyer activity, with clearance levels increasing from 50% over late February 2012 to 70% at the same time this year.
In South East Queensland, Mr Reilly said there is evidence of, 'better levels of buyer enquiry and increased levels of stock shortages as demand improves.'
This improvement extends to the Gold and Sunshine Coasts, with markets beginning to stabilise and a lower level of mortgagee-in-possession sales occurring
Supporting this, Mr Edwards said, “Vendors are no longer under as much financial stress and therefore are not being forced to release stock to an already depressed market.”
Perth also showed an improvement in economic growth, residential sales, rental growth and boasts one of the lowest vacancy rates across the country.
Despite these positive indicators, Mr Edwards identifies that significant property growth is unlikely to happen in the immediate future.
“Households will remain focused on debt reduction rather than expanding property holdings which would drive stronger capital growth,” said Mr Edwards.
Following this, not all parts of Australia are seeing improvements, with Adelaide’s residential market still suffering from low buyer confidence.
Although Canberra’s entry level apartments help housing affordability, they are not benefiting the market and buyer activity in the city is staying still despite the Federal Election.