Investment conditions improving
Recent developments in the Australian investment conditions of the real estate market may encourage property investment, as affordable entry prices, high demand and lower interest rates bring the potential for high rental yields.
Affordability has risen significantly in the March 2012 quarter, according to a recent report from the Housing Industry Association (HIA).
The HIA-Commonwealth Bank Housing Affordability Index reveals that affordability has improved in Australia by 6.4 per cent in the last quarter and 11 per cent over the past year.
“In the March quarter we observed a modest increase in earnings, a modest decline in lending rates and a softening in the median dwelling price, so all factors moved in a direction which improved housing affordability,” said HIA senior economist Andrew Harvey.
The capital cities have experienced improvement, with Canberra up by 7.1 per cent, Brisbane up by 6.3 per cent, Hobart up by three per cent and both Melbourne and Adelaide up by 7.3 per cent.
However, Sydney and Perth experienced a modest drop in affordability, falling by one per cent and 1.8 per cent, respectively.
Beyond major urban centres, affordability increased across all states with the exception of Victoria which remained status quo.
“Those trying to get a foothold into the housing market will welcome the recent improvement in affordability, and we should see further investment conditions improving in coming quarters as the May rate cut flows through,” said Mr Harvey.
Referring to the 50 basis point cut to the official cash rate implemented by the Reserve Bank of
Australia earlier this month, Mr Harvey hopes to see increased market activity as a result of lower interest rates.
He also hopes to see reforms to policies to address structural issues that may affect related prices and economic growth.
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“Mr Harvey” is the kinda guy I wouldn’t trust to run a fruit stand. Affordability is up because the market is sinking but as a property spruiker that’s a definite offlimits as a subject. Of course that would be important information for a potential buyer/investor but of course ethics in this industry are somewhat questionable at the best of times.