Cautious optimism for housing markets in cities beyond Sydney, Melbourne, experts say

Property markets are improving around Australian cities beyond Sydney and Melbourne in the wake of the federal election and a string of good news for borrowers, property experts say.

The housing market’s recovery has been the most dramatic in the two largest south-eastern capitals, but cities elsewhere have also had some upside in the past few months – even poor-performing Perth is seeing some green shoots.

House prices edged lower last quarter in Brisbane, Adelaide, Canberra and Perth, but ANZ senior economist Felicity Emmett said the falls were moderating since sentiment picked up after the clear election result, three rate cuts and a slight loosening of credit standards.

“The fundamentals are generally pretty solid for house prices in Australia,” she said. “Immigration is strong, rates are low and will stay low, and we don’t have a problem with oversupply.

“We’re seeing an initial pop in the market, but I think really from the beginning of next year we’ll see those gains moderate, and we’ll see moderate and consistent gains across all the capital cities.”

Ms Emmett said the broader economy was also showing some early signs of recovery.

“Housing normally leads the economic cycle, particularly when you look at construction,” she said. “The economy will start to pick up in the next year or so. This improvement in housing is just the beginning of a more gradual improvement in the broader economy.”

Century 21 chief executive Warren McCarthy said he was cautiously optimistic for capitals outside the big two.

“We looked at our listings across the business. Because we’re all across Australia, we’re actually up 12.9 per cent,” he said.

“Has that extended itself into the likes of Brissy, Adelaide, Perth? We saw a burst of activity in the same light in Brisbane, but that’s since come back.”

The Agency chief executive Matt Lahood said purchasers were finding good buying opportunities in cities outside the two largest capitals.

“I think a lot of people see value-for-money in these places – like Brisbane,” he said.

Ms Emmett said Brisbane was in the best position to make the most of the recent price rises. “Brisbane, especially, has a little more potential because it has solid population growth as well so there’s potential to see some strong gains,” she said.

In Adelaide, prices stabilised because of constrained supply and fairly steady demand, Toop and Toop partner Bronte Manuel said.

“Incrementally, the number of transactions year on year have gone down,” he said. “We’re still in a market where stock levels are low, which is creating strong opportunities for sellers.”

Perth was still mostly a negative picture but was showing early signs of a recovery, Ms Emmett said.

“We’ve seen a bit of moderation in terms of the magnitude of the fall,” she said. “Over the year, Perth is down 9 per cent. There’s likely to be a lot more weakness in Perth until the Western Australian economy picks up.”

Canberra’s property market was doing better than Brisbane, and should remain strong, The Agency’s Mr Lahood said.

“Canberra’s clearance rates at auction are defying most markets across Australia.”

Ms Emmett said Hobart was continuing to be a star performer, with the best performance outside Sydney and Melbourne.

“Hobart has been an amazingly good news story,” she said. “They’ve seen a bit of stabilisation in recent months in prices.

“The outlook is good there, but for a more moderate rise going forward.”

And Darwin was still was a weak property market, with a 4.4 per cent yearly fall in prices.

“Darwin is challenged, prices have been falling there for some time, and Darwin will remain relatively challenged,” Ms Emmett said. “Their economy is feeling the impact of the completion of the latest LNG plant and unemployment has been rising.”