Property Pirces on the rise

It appears that Sydney will be leading the property boom in 2013 as economists are predicting property prices to increase by as much as five per cent in the next 12 months. Credit growth has been somewhat stagnant for some time, however there seems to be an increase in pre-approval loan applications in the last few months, perhaps due to the fact that Australian homeowners currently have more wealth than at any time over the last decade.

Home loan rates began falling in November 2011, meaning homeowners with an average $350,000 mortgage, are now saving $3641 per year. Migration is also at a three and a half year high, adding demand and therefore value to our property market.

However, what appears will be the greatest driver of growth, is rental yields. Currently vacancy rates are under 2 per cent, which will drive rents to increase, and in turn, people will begin looking the yield on these properties and saying “well, this home should be worth more”.

Based on the NAB forecast that interest rates will fall another 0.5 per cent, the bank predicts property prices to surge between five per cent and seven per cent in the coming year. This is great news for Sydney homeowners and investors, as 2013 will see them at the forefront of the property boom.