Housing market hots up

SIGNS of life are returning to the region's property market as agents report buyers are trying to get in before further interest rate rises.

SIGNS of life are returning to the region’s property market as agents report buyers are trying to get in before further interest rate rises.

Just last week PRDnationwide at Ballina recorded an auction clearance rate of 80 per cent.

“The market is definitely strengthening,” PRDnationwide’s Brett Jones said.

“People want to jump in (to the market) and lock in before interest rates go up again.”

The Reserve Bank raised rates by 25 basis points in October and November. Economists say there is a 60pc chance of another similar hike next month.

The benchmark standard variable home loan rate now stands at 5.73pc, according to rate monitor InfoChoice.com.au.

Mr Jones said investors were also returning to the market, but were ‘pipped at the post’ at last week’s auction by first and second-home buyers.

He said buyer interest had grown in the $450,000 to $700,000 price range as families looked to upgrade or downsize.

However, a lack of sellers was holding back the sector, Mr Jones said.

At the upper million-dollar-plus end, agents have reported more houses were coming onto the market, but buyers stung by the financial crisis were still holding back.

Median house prices across the region all rose in the six months to October, with Ballina putting in the best performance at 10pc, followed by Casino (6pc), Lismore (5pc) and Byron (4pc), according to Australian Property Monitors.

Adding to the supply problems, the Housing Industry Association yesterday warned the recovery in new home building would fall short of what is required to meet the increase in nation’s population.

“The issue confronting the housing industry is not a shortage of demand but rather supply-side constraints caused by bottlenecks in the availability of serviced urban land and a shortage of suitably skilled tradespeople,” HIA chief economist Harley Dale said.

“Failure to address the obstacles to boosting Australia’s housing supply will lead to damaging bouts of house price inflation and the imposition of a higher interest rate structure than we would otherwise experience.”

HIA is forecasting the number of housing starts to increase by 9pc over this financial year, following an 18pc collapse the previous year.

The value of home renovations is predicted to reach a record $32.8 billion, up 10pc, over the three years to 2011/12.

Originally published as Housing market hots up