Sydney tipped to fire up home price recovery - The Australian

Kelly and Dan Robertson-Jones with son, Elijah, were keen to gain a foothold before prices rise. Picture: James Croucher Source: The Australian

Source: The Australian

SYDNEY will lead Australia's patchy housing market out of the doldrums with residential price growth of 19 per cent over the three years to 2016, according to a report released today by economic forecaster BIS Shrapnel.

Sydney's median house price will reach $795,000, while Canberra will deliver the slowest house price growth in the country, with a 3 per cent increase dragging its forecast median house price to $505,000 in three years, according to BIS Shrapnel.

Queensland's recovery would kick in the next year, with Brisbane house prices to grow 17 per cent by mid-2016, while Melbourne -- where prices boomed three years ago -- would limp along at 5 per cent growth by 2016, the forecaster found.

BIS Shrapnel senior manager Angie Zigomanis said low interest rates had sparked an improvement in the residential market that started in the second half of last year. Prices had grown, and there had been improved off-the-plan apartment sales and new apartment construction.

"The current standard variable rate of 6.2 per cent is the lowest level since 2002 outside of the GFC-induced low interest rates in 2009," Mr Zigomanis said. "Outside of 2009, home loan affordability in all capital cities is at its best level since the first half of the 2000s."

The low interest rates would take time to filter through to improved consumer confidence, which would drive retail spending, overall new home construction and business investment, he said.

The result would be only a modest improvement in the residential market next financial year, BIS Shrapnel found.

Dan and Kelly Robertson-Jones, who are in their 30s and have a two-year-old son, Elijah, bought a home in the inner Sydney suburb of St Peters in March.

Three years after returning from London, the couple, who both work in market research, found Marrickville was already too expensive.

"St Peters is the only area in the inner west that is still affordable. We're investing in an area that we're hoping will also increase," Mr Robertson-Jones said.

"We wanted to get our foot on the property ladder before prices went up."

Ray White real estate chairman Brian White said the pick-up in NSW, and particularly Sydney, had been pronounced compared with the rest of the country. Sales in Sydney's middle to upper price brackets had dragged median prices up, he said.

"Sydney is certainly the star, the standout, but Western Australia has also been a highlight," Mr White said.

"But it won't be too long before Melbourne comes into the slipstream." There was no reason why Melbourne houses prices should remain depressed, Mr White said.

The head of Sydney inner-west agency Day and Hodgson said investors had come back into the market in large numbers.

"Fifteen per cent of the properties we've sold this year have been to investors," said Maria Hodgson, who sold the Robertson-Joneses their home. "This is probably one of the biggest winters I've seen in the last seven years."