House prices to rise up to 20% by 2014

Stable interest rates and improving economic conditions will drive house prices up by 20% in the next three years, with Perth and Sydney leading the way, a major mortgage insurer says.

QBE Lenders’ Mortgage Insurance (QBE LMI), which supports lenders, has forecast price growth of up to 20 per cent in Sydney and Perth by 2014 as business and consumer confidence improves.

Confidence among first home buyers and renovators is expected to improve and lead to residential price growth in the next 12 months, QBE LMI said in a housing outlook report.

The report said factors underpinning price growth included stable home loan rates and the economic outlook becoming more positive on the back of rising business investment.

Momentum in the housing market is forecast to pick up further in 2013, on strengthening economic conditions, underpinned by investment in the mining and resource sector, the report said.

However, it will be tempered somewhat by inflationary pressures, which would cause a rise in interest rates and potentially keep the Australian dollar high, damaging some non-resource sectors of the economy, QBE LMI said.

The resources boom is the main driver of QBE LMI’s forecast house price growth in Western Australia, while lack of housing supply is the main factor for Sydney’s projected price rises.

Melbourne is forecast to have the slowest price growth, six per cent by 2014, because of record levels of new dwelling supply.

More moderate house price increases of between six and eight per cent are forecast in Adelaide, Hobart and Canberra.

Brisbane will just trail Sydney and Perth, with a 16 per cent price growth forecast.

(source: The Sydney Morning Herald)

About the Author