Property directions and trends for 2014
While 2013 has been a very successful year for Australian property investment, buyers still on the sidelines are likely wondering what the coming year has in store.
Various reports released in recent months can help shed some light on how the market will perform during 2014, particularly in the Sydney area.
According to SQM Research, the country's housing market recovery will be led by Sydney in 2014. Prices in the region are expected to rise between 15 and 20 per cent.
"The housing recovery that commenced in the third quarter of 2012 for most capital cities is now about to enter into a more accelerated phase from what has generally been modest price rises to date," said Louis Christopher, managing director at SQM Research, in a September media release.
"However, the results will be quite varying from city to city."
While Mr Christopher forecasted price declines in areas like Canberra, and modest increases in cities like Melbourne, he described Sydney as "a beast unto itself".
This is good news for those wondering whether to buy investment property in Sydney.
However, SQM Research was contradicted by a more recent report from Australian Property Monitors (APM).
First, APM made it clear that Sydney was the winner when it came to house value increases during 2013, reporting that the median house price increased more than 10 per cent throughout the year, reaching a record-high level of over $700,000.
However, citing a "weakening economy," APM also predicted that price growth will moderate during 2014.
While house prices are expected to increase in the coming year, APM predicts growth of between 5 and 7 per cent, far short of SQM Research's forecast.
Falling yields, rising vacancy rates and subdued rental growth were all cited as issues that will discourage property investors in the region. At the same time, the number of first home buyers was predicted to pick up gradually.
Meanwhile, the prestige market is forecast to remain relatively flat.
However, slower growth isn't necessarily a bad thing, especially concerning luxury homes in Sydney, as it can make obtaining such a property more affordable for home buyers.