House prices in Queensland and NSW set to recover

Housing prices in Queensland will bottom out by the end of this year but eventually peak during 2011, leading to a recovery within the housing sector, a new report says. The report comes as another real estate expert claims more houses are being sold for over $1 million in the Sydney area.

The May edition of the Midwood Queensland Investment report shows that Gold Coast housing prices fell by 16% from their peak in December 2007, while Brisbane prices fell 10% during the same period.

Bill Morris, author of the report, says the November 2008 edition of the report predicted a 20% fall in prices and that low point is not too far away.

“We’re approaching that 20% figure in the Gold Coast, so I don’t think there’s much further to go. If not totally there, we’re almost there, so by the end of the year we’ll reach that position,” he says.

Morris says that the property market will see recovery when banks begin lending for major developments as demand reaches a breaking point.

“The banks initially took a position where they wouldn’t lend on a development at all, unless they had 100% of it pre-sold, where few of them did. Housing is high volume with low profits, and they can’t just exist on that, they’ll have to lend on new developments where they get higher margins and higher risk.”

“There will be demand and eventually they will see these developments as low risk, encouraging banks to lend. A lot of lending at the lower end of the market – more million dollar houses being funded, but they’ll certainly fund the lower end.”

Meanwhile, John McGrath from John McGrath real estate says that the Sydney housing market is beginning to record more sales above the $1 million mark.

“Whilst the majority of the strength has centered on the lower end of the market, I’m also seeing sales results more regularly in the $1 million-plus range significantly exceeding expectations,” he said at the release of his Market Review for Winter 2009 report.

“Sellers in the lower end have pocketed better than expected results are reinvesting these funds to upgrade their homes with confidence.”

McGrath says several high-end Sydney suburbs including Palm Beach, Northwood, North Avoca and Breakfast Point are hot spots for property at the moment, where prices have fallen by as much as 20%.