Perth house prices tipped to rise 6%

16/06/2008 - 12:25

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Perth median house prices are predicted to increase by six per cent by fiscal 2011 with prices to remain flat this year, according to economic forecaster BIS Shrapnel.

Perth house prices tipped to rise 6%

Perth median house prices are predicted to increase by six per cent by fiscal 2011 with prices to remain flat this year, according to economic forecaster BIS Shrapnel.

In its Residential Property Prospects 2008 to 2011 report, BIS said the median house price for 2007 was close to static as affordability constraints began to outweigh any impetus from booming economic conditions and interest rate rises hit home.

Purchaser activity also declined with total lending in the state for owner occupation falling by 12 per cent for fiscal 2007, and a further 2 per cent in the nine months to March 2008 on year-on-year terms.

As a result, report author Angie Zigomanis expects a June quarter median house price of $460,000, reflecting a two per cent annual increase.

Mr Zigomanis said she forecasts house prices to grow only marginally 2009/10 and after that expects affordability to improve given the strong growth wages growth forecast for the state.

Across the country, house prices are tipped to rise next financial year as Australia's fastest population growth in two decades outweighs the effect of higher interest rates, an economic forecaster says.

The report also says that banks may offer more attractive lending rates in 2009.

The report said residential property markets would experience marginal price increases in 2008/09 as the population was expected to grow by 1.5 per cent, its highest level since the late 1980s.

"Australia is experiencing record net overseas migration flows which is underpinning what is already strong underlying demand for housing," the report said.

Mr Zigomanis said rising rents and improving credit conditions would cause house prices to increase in most capital cities.

"As credit conditions recover over the course of 2009, we expect banks will gradually pass on lower borrowing rates to customers," Mr Zigomanis said.

"This easing will enable house price growth to pick up in many centres during 2009/10 and 2010/11."

BIS Shrapnel, which forecasts another rate rise in the September quarter, said higher interest rates were more likely to stop price growth than force a downturn.

Median house prices in Queensland were expected to grow strongly in the three years to June 2011. Brisbane, Gold Coast and Sunshine Coast properties were tipped to enjoy a nation-leading 22 per cent growth.

Melbourne and Adelaide median house prices were tipped to grow by 16 per cent to June 2011, followed by Canberra's 15 per cent.

Hobart house prices were tipped to rise by 14 per cent by June 2011, but would still give the city Australia's lowest median capital city house price, of $365,000.

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