Residential property: Stable and Rents to increase.

Residential property: Stable and Rents to increase

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INDICATORS SHOW STABLE PROPERTY MARKET IN 2005

National economic indicators are pointing to a stable residential property market for 2005 but rents are expected to rise.

Laing+Simmons general manager Leanne Pilkington said that economic prosperity will ensure the residential property market is unlikely to slow in the coming year.

According to Westpac Economics, the year average growth of 3.5% in 2004 will likely be mimic in 2005, little changed from the 3.3% rise in 2003.

“Favourable international conditions will provide a boost; consumers, having benefited from a fiscal boost, are continuing to spend; and the subtraction from a cooling housing sector looks likely to be relatively moderate,” Westpac Economics said in a report.

“Unemployment has hit a 28 year low, housing affordability has improved and despite fear that interest rates would rise, they have remained stable,” Pilkington said.

“The economy is in a strong position and that is a very posit ive indicator for the people wanting to enter the housing market,”

Median housing rental rates have remained stable over the last quarter with vacancy rates dropping by 0.8% in Sydney to 2.8%, the lowest since December 2000.

Pilkington said that despite recent stability in the rents, a number of environmental factors may cause increases in the coming year.

“We have seen a significant decrease in the number of investo rs purchasing since the introduction of the exit tax and the impact of that is now being seen in vacancy rates, which are at a four year low.

“With 1000 people a week moving into the Sydney basin these r ates will continue to drop and ultimately the impact will be rising rents,” Pilkington said.

Kathryn O'Meara, December 15, 2004 - www.propertyreview.com.au