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Economists are predicting an upsurge in the prestige property market this year as a result of a strong stock market and elevated government spending.
In an article published by property publication Real Estate Business, Australian Property Monitors (APM) senior economist Dr Andrew Wilson says the prestige market is set to pick up in 2013.
“One of the drivers of the prestige market is the stock market and it is a good precursor for what happens. We have seen strong movement in the stock market through December and into January. We are starting to see measures in the stock market that we haven’t seen for two to three years.”
Wilson says the extra wealth created by a booming stock market should, in turn, give people the cash to buy prestige properties.
“In two years’ time, I think we will start to see much more confidence in the upper end of the housing market. We will see a 3-5% increase in Sydney driven by more activity in the prestige market, which looks to have bottomed out after a very quiet two-year period.”
But Prestige Properties agent Gavin Con Foo says the high-end property market upswing is far from being tied exclusively to local interests. Particularly in Sydney, Con Foo says the trend can largely be attributed to Asian investors.
“I sold a $3.2 million and a $4.8 million property late last month. Asians want to invest here, not in the US, due to the good Aussie dollar.”
The APM report says Melbourne will likely continue to move “relatively sideways” and the momentum of the prestige market should continue.
Across the broader property market, the biggest winners in 2013 will be Perth and Darwin.
Wilson says the recent admission by the federal government that they will no longer be able to make a budget surplus should help the property market.
“This can be a positive because we won’t have a tightened fiscal policy as they try to meet surplus. This has tended to offset the loosening of monetary policy by the RBA with low interest rates.”
