Prices on houses to grow faster than units in 2014
Within the property market, Sydney remains the standout performer, but price growth in the city’s unit market is only slightly above inflation (1%), according to Residex founder John Edwards.
“The reason for this is a surplus supply of unit stock,” Edwards said. “The majority of new stock in Sydney can be found in the unit market, while the house and land market cannot keep up with demand.”
It’s a similar story outside Sydney. Developers prefer blocks of units and the current supply of apartments is sufficient enough to ensure price growth in the unit market will remain relatively low compared to the house and land market.
“Sales activity also confirms that the market is not overheating and we are not entering boom times… Total sales activity is still lower than it was in 1999,” Edwards said.
Residex models suggest growth in 2014 will be similar to what was seen this year, but will moderate once interest rates increase to more normal levels.
Edwards added that Australia is transitioning relatively smoothly from the mining boom to a more ‘normal’ economy and is in a fairly strong position compared to most developed countries. He said current conditions in the economy leave much to be positive about.
“There has been a surge in business confidence since the announcement of the Federal Election, which seems to have carried forward into the first few weeks of the new government’s term.”
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