VICTORIA OUTLOOK Growth Any increases in investor activity are expected to be in the vicinity of 5 per cent. Investor activity is expected to be the strongest growth segment, driven by improved affordability and attractiveness of regional Victoria, along with improved yields and rental returns. This would be followed by upgraders, then first home buyers, and then retirees.
Changing Market Conditions Interest rates are expected to decrease in the main, by between 0.25 to 0.5 per cent, although a few said they could be as much as between 1 and 2 per cent. Lower interest rates are expected to impact on buyer confidence, stimulating the market, especially investors, building on the momentum generated towards the end of 2011. The carbon tax is expected to have an impact on the property market, potentially producing higher home and rent prices, as well as reducing consumer confidence. The Victorian government has been able to keep a lid on government charges per block of land released to around $20,000, which has helped stimulate the new housing market.
COMMERCIAL MARKET Victoria is currently outperforming all other major office markets and it is expected to continue to set the pace until at least the first half of 2012. Melbourne’s office market is stronger than Sydney and its prospects over the next two years alone are bright, with a good balance struck between growth in rentals and affordability. The state’s commercial property market is expected to remain strong in 2012, with very little change in market conditions although there is the potential for prices to rise by up to 5 per cent. Vacancy rates may rise by up to 5 per cent, as supply is currently meeting demand and rents will begin to stabilise, perhaps bringing them in line with other states. Lower interest rates, which are expected to further decrease in 2012, should strengthen the commercial property market and create more buyer interest.
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FIRST NATIONAL REAL ESTATE 2012 PROPERTY MARKET OUTLOOK