The institute’s 2008 Real Estate Market Outlook says 2007 was a vintage year for homeowners, with prices climbing in most parts of Australia. Investors also benefited from improving yields thanks to tight rental markets, the report notes.
On the other hand, would-be homebuyers and those who have overcapitalised found 2007 a difficult year given access and affordability issues and rising interest rates.
The report from the Real Estate Institute of Australia (REIA) suggests a mixed outlook for 2008.
\"In 2008, the main challenges facing the residential real estate market will be low home loan affordability, the possibility of more interest rate rises, the ongoing fallout from the US subprime problems and an extremely tight rental market driving rents up,\" the report says.
\"Balancing this are positive signals for the market, including the resources boom continuing to drive prosperity in some states and solid consumer and business confidence.
\"These factors will also contribute to ongoing strong demand and increasing returns for investors in the office and retail property markets.\"
The weighted average median ‘other dwelling’ price was $350,059, up 8.9 per cent on a year before.
\"The REIA expects price rises to continue in 2008 in all states except New South Wales, where the market is more subdued, and WA, where prices are settling after a period of large increases,” the report says.
\"Well-located property close to employment opportunities and infrastructure will continue to perform well.\"
The report says the factors driving prices higher include:
* population growth;
* demand for newer and more environmentally sustainable housing in areas close to employment and essential services
* a shortfall in the supply of new dwellings; and
* the transfer of infrastructure costs into the prices of new homes, therefore also pushing up prices of established homes.