KEY POINTS:
SYDNEY - Residential property should still be viewed as an attractive investment option for Australians, despite the higher interest rate environment, a non-bank lender says.
Wizard Home Loans chairman Mark Bouris said consumers should be cheered by the prospect of a rate cut in 2007, following this year's triple-whammy of hikes.
The first ever Wizard Property Report was released in Australia today, examining changing property market trends on a national, state and regional level.
Mr Bouris said the report showed the contradictory fortunes of the state economies mirrored their real estate markets, which were at extremely diverse stages of cyclical growth.
"For consumers considering property, the market generally still has growth and they should remain confident, despite the recent rate hike, as there is a strong chance rates will come down in 2007," he said.
The Reserve Bank of Australia hiked in May, August and November this year, lifting official rates by 25 basis points each time, to the current 6.25 per cent.
The report, produced in association with valuer Herron Todd White, found that in most capital cities, many consumers are being priced out of the owner-occupier market, with renting becoming their only option.
Meanwhile, cashed-up baby boomers are seeking 'lifestyle' properties such as waterfront dwellings and good quality inner city apartments.
Trends towards low maintenance inner city living will continue as more young people remain single for longer, the report showed.
Australia's ageing population will also have a major influence on the composition of dwellings over the coming years, as people seek low maintenance accommodation in close proximity to local services.
Mr Bouris said research was key to investing in property.
"Buying property should be viewed as a long-term investment strategy, and proactively increasing your knowledge should be the cornerstone of any wealth-creation strategy," he said.
The report found that on a state level, the biggest issue for the NSW property market is affordability.
"We are unlikely to see significant growth until there is an improvement in affordability and in allowing first home buyers back into the market," Mr Bouris said.
"This comes down to wage growth and reducing the cost of bringing new properties into the market."
The report showed Queensland was likely to remain one of the nation's stronger performers, with stable property prices and a good balance between supply and demand in most areas.
The West Australian market is likely to continue its recent furious growth, although it is not expected to enjoy the surge experienced during the June quarter this year.
The report said Victorian real estate had shown an improvement of about 4 to 5 per cent during the quarter, with vacancy rates remaining low.
And in South Australia, Adelaide's prestige residential market is powering ahead, due to strong demand and limited supply, with the number of potential buyers in the A$1 million ($1.16 million) to A$2 million price bracket increasing significantly.
- AAP
