Early Property Market Recovery Predicted

According to the recently released First National 2009 Property Outlook Mid Year Update, the South Australian property market continues to defy the sceptics, supporting an earlier than predicted Australian property market recovery.

“Property values are still edging up in Adelaide, which is helping to maintain confidence in the property market Taylor’s First National Real Estate, Principal, Paul Taylor, said.

“Housing affordability for the state’s capital has improved and the outlook for the next 12 months is positive with the rental market still tight and availability of new quality projects limited.

“Solid underlying demand will contribute to healthy price growth in Adelaide over the period 2009-2012.”

According to Paul, the Australian property market is already well and truly on the road to recovery, with a new property cycle expected to commence by the end of the year.

“Record levels of housing affordability, coupled with a continuing shortage of supply across every state will continue to support the market in the coming years,” Paul said.

“Housing prices are set to rise, rental yields are forecast for continued improvement and the government is investing heavily in major infrastructure and property projects.

“All this augers well for the market, ensuring it will thrive as we start to recover from the global financial crisis.

“But the bargains that are there at the moment won’t be there forever with the market already showing strong signs it is ready for the beginning of a new cycle, which may see housing affordability reduced.”

According to Paul, as the nation recovers and the property market strengthens, there are a number of factors to watch.

“At some stage in the near future, higher interest rates will be a factor, as the nation begins to pay back some of the money it has borrowed in its efforts to sustain itself through the global financial crisis and subsequent recovery,” Paul cautioned.

“This is the beginning of a new cycle in the Australian property market, and while supply and demand will put a floor under the property market in the short term, particularly during its recovery, relative affordability may well rear its head again and become the fundamental issue it has been in the not too distant past.”

With many First National agents reporting strong auction clearance rates since the beginning of the year, Paul is confident the middle tier market is beginning to move, and that investors are beginning to venture back into the market.

“For the first time in 17 years, property punters can enjoy high growth and strong yields, something that is not easy to come by in this day and age,” Paul said.

“Conditions are such that you can get properties that are going to provide good growth over the long term and give you cash flow in the short term that in the past you would never have expected.

“The astute investor and buyer will then seek to lock in interest rates to manage outgoings as the economy picks up and the property cycle begins its next phase.”