Slow housing growth likely in 2014

It was a rollercoaster year for real estate in 2013, but predictions of another bumper year ahead may not be so bright.

Amid cuts to the first home owners grant and a federal election, Victoria’s housing market performed strongly last year. 

As another year ticks over, experts have forecast a slow growth in the state’s housing market for 2014.

Real Estate Institute of Victoria (REIV) Ballarat president John McMahon said Ballarat’s housing market remained stable for most of the year with outside influences creating expectations of a moderate market for the new year.

“Economists forecast in the next 12 months that interest rates will stay stable and a predicted growth in the housing market will show more recovery, but it won’t show growth spurts like 2013. It will remain a steady growth,” he said.

Last year Ballarat fared well with REIV’s November House Price Index showing an increase of 0.8 per cent, remaining at its peak for the quarter.

September median house price data showed the median house price in regional Victoria was stable, with Ballarat, Geelong and Bendigo outperforming the broader market.

Although the first-time home owners grant was abolished for existing homes from July 1, Mr McMahon said the later end of 2013 showed some significant good signs for the housing market across Victoria.

“The number of first home buyers has dropped from 20 per cent in the previous year to just 12 per cent,” Mr McMahon said. 

“There was also early speculations and a very long lead into the federal election which caused a lot of people to sit on their hands.

“Potential buyers and investors tend to look for things in the policies of major parties and determine how those policies will affect economy and interest rates, so a lot of people waited to see the outcome.

“We had a recovery after the election, sales crept up and investors jumped back into the market.”

Victoria’s slow economy and unemployment conditions across the state are being suggested by experts as the contributing factor to a slower market this year, but Mr McMahon said it was not all doom and gloom. 

“If we see the predicted economy growth of 3 per cent, it will hopefully see an improvement in unemployment,” he said.

“We will see a continued recovery, just not at a galloping growth.”

alicia.thomas@fairfaxmedia.com.au

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