The outlook for home values in 2014 remains positive with figures from last year showing a 9.8% increase over 12 months. This was the largest increase in value growth since 2009 with the best performing capital city being Sydney at 14.5% with Hobart the weakest cities to grow at 2.2%.
Regarding the new growth in house values ANZ analyst Paul Braddick and Dylan Eades pointed out that ‘Low interest rates and improved housing affordability have released much of the pent-up buyer demand built up over recent years, with rising prices reinstating the incentive to buy now rather than later.
They also stated ‘Population gains continue to outstrip new home supply and an unprecedented shortage of housing will maintain upward pressure on prices, rents and building activity."
CommSec economist Savanth Sebastian says the next wave of growth in 2014 may come from expats and foreign investors with the Australian dollar falling about 14% to around 89.5 US cents. He also stated the perception that interest rates had reached a low point with long term rates being lifted in the last 6 weeks. What we could see is rates will start to lift by the end of 2014 allowing the reserve bank to keep prices in check.
Borrowers are beginning to factor rate rises in with around 17 to 18 per cent of people fixing housing loans. Now may be a good time to check your own finances to see if your long term strategy would benefit from locking in today’s rate.