Monday, 25 September 2017

New home sales in Queensland in free-fall, leading to possible boost to values


Evolution of Sydney's property prices since 1980
QLD News
New home sales in Queensland in free-fall, leading to possible boost to values
John McCarthy, The Courier-MailAugust 29, 2017 10:00pm
Subscriber only


QUEENSLAND homeowners could be in for a spring surprise as a plunge in the number of new homes coming to market is predicted to lead to a surge in existing home values.

According to the Housing Industry Association, the number of new houses is in free-fall and has been since November, leading to suggestions this might boost existing home values.

Experts said it was also likely to impact affordability of housing, which already meant younger people were having difficulty entering the market.

Adding to that was a sharp downturn in the apartment market.

“If you want to get a cheap apartment, get in now,’’ REA Group’s chief economist Nerida Conisbee said.

In regional Queensland, where prices have been falling for about four years, it could also lead to the stabilising of prices.

The real estate industry also said that if population forecasts were accurate, and Brisbane was to reach a population of 2.95 million by 2031, then demand for dwelling growth was similarly going to continue growing.

According to the Housing Industry Association, new detached house sales fell almost 12 per cent in the first seven months of 2017 and were down 16.1 per cent compared with June sales.

HIA economist Tim Reardon said the lower supply of new houses could mean higher prices or a prolonging of the existing strong demand, and that was backed up by other industry experts.HIA economist Tim Reardon. Picture: HIA

“What’s happening in Queensland is consistent with what’s happening in the rest of the country and that’s a general slowdown (in new home sales),’’ he said.

“In Queensland, the multi-unit apartments have come off faster than they have elsewhere and it’s a reflection of the change of cycles.

“It’s more likely that as the supply of housing slows, it results in higher pricing. New homes are important in keeping house prices affordable.’’

Ms Conisbee said higher prices were possible.

“Brisbane has seen record levels of apartment development and while that hasn’t been great for prices, it has been great for affordability,’’ she said.

“So with less development, those high levels of affordability would be affected as prices start to increase.

“The same with houses. Queensland has a good track record of building housing and less development will mean less affordability.

“We are seeing a lot of demand in Brisbane. We have heard a lot about a crash and we have certainly not seen any indication of that on our site (realestate.com.au).

“I don’t think it will be immediate but I think it will prolong the cycle so we will see a continued strong demand for housing.

“Interest rates are on the way up so that should slow the market, but it is not moving as quickly as we thought and the announcement from HIA will prolong the cycle.’’

Real Estate Institute of Queensland chief executive Antonia Mercorella said demand and supply in Queensland were not evenly spread.

“Regional Queensland has faced falling median house and apartment prices for the past four to five years, due to falling demand,’’ she said.

“We need supply to contract in these markets to stabilise property prices; however, the State Government continues to stimulate construction of houses in these markets through its first homeowner grant.

She said if supply did not keep pace with growing demand, then prices would inevitably rise.

“However, we do have a strong supply of medium to high-density dwellings to absorb before we start to see upward pressure on prices, and with several new masterplanned communities in the Logan/Ipswich area and Sunshine Coast region forecast to house many thousands of families, it will be a while before price growth exceeds that steady 4-6 per cent.’’

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