A CHANGE of seasons may also bring a change of fortune to a flat real estate market.
Potential property buyers are benefiting from a combination of positive forces that have helped create a mood of confidence for the spring selling season that started at the weekend.
Low interest rates and inflation, lingering house price weakness and tight rental vacancies are good for investors looking to buy, but real estate experts are split about the likelihood of spring marking a turnaround for property.
SQM Research managing director Louis Christopher says market conditions are a little better than this time last year "but it doesn’t mean we are going to head into a big property boom”.
"If rates stay on hold, that will be conducive to stimulating the housing market, and we are likely to see continued market recovery, but there are many X-factors at play,” he says.
These include commodity prices, rate cuts and the threat of a euro breakup.
"Rents over the past five years have been growing at 7 per cent a year, way above inflation,” Mr Christopher says.
"That’s been good news for existing investors, but they have had to offset that against falling house prices.”
Mr Christopher says Australia’s housing market is becoming increasingly segmented with falls still occurring in Melbourne, Hobart, Adelaide and Canberra, stabilising in Sydney, Brisbane and Perth, and a boom in Darwin.
"We have a lot of stock to absorb in the marketplace,” he says.
"Given that, it’ll be hard to see a punchy recovery.”
Real Estate Institute of Australia president Pamela Bennett says lending to investors has been stagnant in recent months but there are signs they are starting to return to the market.
"The early indications are that spring should see a return of buyers,” she says.
"There is anecdotal evidence of some sales that have been well above reserve.
"The overall mood for the housing sector at the moment is one of quiet confidence.”
RP Data research analyst Tim Lawless says spring is looking more positive than last year when capital city sales volumes dropped 3 per cent and home values fell.
He says most economic indicators are stronger now.
"We are seeing properties selling faster now, vendors are discounting their initial asking prices by a lesser amount and auction clearance rates have improved from the lows over the second half of 2011.”
Lawless says capital city dwelling values rose 1 per cent in June, then 0.6 per cent in July, and the August data to be released this week is likely to show a modest rise.
STATE OF PLAY
DARWIN
Median house price:
$543,500
(year-on-year +9%)
Rental yield: 5.7%
Vacancy rate: 0.4%
BRISBANE
$440,000 (-2.8%)
Yield: 4.7%
Vacancies: 1.5%
SYDNEY
$595,000 (-1.6%)
Yield: 4.3%
Vacancies: 1.8%
PERTH
$475,000
(-0.5%)
Yield: 4.4%
Vacancies: 0.7%
ADELAIDE
$387,750 (-4.2%)
Yield: 4.4%
Vacancies: 1.6%
HOBART
$314,500 (-6.4%)
Yield: 5.1%
Vacancies: 2.7%
MELBOURNE
$510,000
(-4.2%)
Yield: 3.6%
Vacancies: 2.9%
Source: RP Data, SQM Research
