Outlooks for Queensland, Victoria and Western Australia have already been given during forecast events held by respective state divisions of the Australian Property Institute (API).
The NSW Property Market Outlook will be held at the Museum of Sydney Theatre on Wednesday 27 February, while the South Australia State of the Market will be held Friday 22 March at the Adelaide Pavilion.
Below is a summary of the forecasts presented at recent Queensland, Victorian and Western Australian events:
Leading Australian economist Bill Evans shared his forecast for the Sunshine State at the API Queensland Division’s annual Economic Indicators Luncheon early this month, which was co-hosted by the Financial Services Institute of Australia (FINSIA).
His forecast focused on Queensland but other insights included:
“Is it a good time to buy? Yes, but only in NSW are people getting involved. New home buyers are on the sideline,” he said.
“Interest rates are down… lots of property in the pipeline (in Brisbane). If vacancy rates fall, it will affect the yields... Yet it’s still an attractive position.”
Other predictions included:
- QLD house prices fell in the first half of the cycle but were slowly improving;
- Investors and upgraders (homes) were up by 14%;
- Housing market described as “sluggish” due to first home buyers not entering the market as they once did;
- NSW prices were good, Victoria not great, Perth could be better;
- Brisbane and Sydney had highest rental prices, which was attractive to investors.
- Housing and property will need to take over from mining as the main driver of the economy as the “Federal fiscal policy is operating against the economy”;
- High yields for commercial property;
- Uncertain mining prospects – spending on mining will peak in 2013, with sector investment falling in 2014. Non-mining investment needs to grow now to take the lead.
- Coal will compete with gas mining for labour. Gas is the largest sector at $190 billon. Queensland should start to boom from gas in 2015-2016
- Australian dollar will peak at 1.06/7US;
- Preferences of international tourists will change, with Sydney and Melbourne gaining popularity over Queensland destinations.
In WA, the API/FINSIA Residential Property Outlook 2013 was held this month at the Perth Convention and Exhibition Centre. Speakers included REIWA President David Airey, urban planner Ray Haeren, regional director of consultancy firm Urbis, and Geordan Murray, Housing Industry Association economist.
They said factors that would influence the long-term housing supply included shrinking households, fly-in-fly-out (FIFO) workers living further from cities, baby boomers’ preference for big homes rather than retirement villas, international and student migration, and Government focus on high density housing.
REIWA President David Airey said:
- Households were adapting to post-GFC housing environment;
- Ongoing housing crisis talk is neither helpful nor accurate. Supply exists but not at everybody’s price point/location;
- Expecting 10% increase turnover to long term average levels with gradual change in the buyer mix;
- Market composition will influence overall median but real price growth is likely at lower end as supply tightens;
- Expect first home buyers to peak as prices rise – increase shift to new build as supply reduces;
- Rental market to remain tight through to 2014 should stimulate investors but not speculators;
- Softening economic outlook is the downside risk & further rate cuts may not be an adequate catalyst.
State of the Market – Industrial Outlook 2013 (CBRE) Luke Dixon, senior research manager
- Victoria’s relative economic performance to stabilise, with some downside risk in Q1;
- Manufacturing conditions will continue to soften, uptake driven by logistics, transport and resources sector;
- Supply of industrial stock set to rise;
- Further yield compression, tightening spread between secondary and primary yields;
- Rents will stabilise, with modest growth;
- Strong increase in speculative development;
- Increased investor demand from offshore, due to attractive yield spread;
- Land values to rise.
- Industrial rents 3.5% stabilising (Forecast);
- Capital growth $65/sq m (Forecast);
- Land Values modest growth;
- Yields – further compression 50-100bps tightening of spread between primary & secondary.
- Retail investment market in 2013 will continue to be two tiered;
- Prime assets exhibiting sound investment fundamentals will continue to transact;
- Demand will continue to exist for defensive assets, particularly those with strong future growth profiles and those in the Neighbourhood Centre submarket exhibiting a long term WALE;
- We anticipate a widening between prime and secondary yields throughout 2013.
- Values stabilised for prime grade retail centres;
- Anticipated that yields for prime assets will remain stable during 2013;
- Possibility exists for some yield compression for prime assets;
- Potential softening for secondary assets.
Global Overview & Australia – where to now for the multi speed economy Alan Oster, group chief economist
- The domestic economy has hit a soft patch that has continued into the first part of 2013.
- Multi-speed nature continuing – with the weak getting worse. Mining investment continuing but will slow and go backwards as export boom replaces it as a key driver of growth. But employment demand will weaken (less miners to run vs build a mine);
- Currency stays high and may be having larger expectation impacts on activity;
- Improvement in commodity prices helpful but probably not permanent – so less income flowing through the economy;
- With economy still struggling in H1 2013, growth in 2013 won’t be much better than 2%, so unemployment to rise by mid-year (around 5 ¾%);
- Fiscal deficit likely to be around $10-15bn dollars (assuming current policy stance maintained);
- Structural adjustment challenge massive. Business and consumers still very nervous;
- RBA will need to cut rates much further – by around 75 points to around 2 ¼% We see terminal range between 2 – 2 ½% depending on data.