BY GERV TACADENA
Rising rents, low vacancy rates, return of immigrants, and the likely pause in rate hikes could potentially spur recovery.
A return to growth cycle is likely to commence later this year, an economist predicts.
Speaking at the Capital Prudential investment event in Adelaide, AMP chief economist Dr Shane Oliver said while the rise in mortgage rates, high household debt, cost of living pressures, and poor homebuyer confidence will continue to impact the property market, expected the return of immigrants and other growth drivers are likely to spur recovery later this year.
“Ultimately, rising rents, low vacancy rates, return of immigrants and the Reserve Bank getting close to the top on interest rates I think will give us a recovery cycle in the property market, probably starting later this year and going into next year,” he said.
Dr Shane Oliver said some investors might be discouraged from the “negative coverage” on the state of the economy, but the likely recovery in the property market should entice them to participate.
“There’s a lot of noise out there. You turn on the news which is full of doom and gloom that can make everyone quite nervous and can result in people missing out on opportunities,” he said.
Based on his expectations, the national house prices would fall between 15% to 20% peak-to-trough.
According to CoreLogic’s home value index for February, dwelling prices have declined 8.9% since peaking in April last year. This is the largest and fastest decline in values since at least 1980 when CoreLogic’s records began.
