Ben Hurley | Australian Financial Review | October 6, 2011
Residential developers have reported an improvement in consumer sentiment and sales volumes with the arrival of warmer weather and a more stable interest rate outlook.
However, consumers are reluctant to take on new debts and banks predict this hesitation will keep house prices flat for years to come.
At a seminar series held this week by Deutsche Bank, listed developer Australand said there had been a shift in consumer sentiment in August and September and more enquiries were leading to sales.
Australand believed this was largely due to consumers being more comfortable about the outlook for interest rates.
Another listed developer, Stockland, saw no such improvement in the rate of conversion from enquiry to sale, although there had been strong enquiry levels from first-home buyers, and a strong take-up of new releases at Brooks Reach in NSW and Aurora in Victoria.
Both developers said the strongest demand was for affordable land lots and apartments. This fits with figures released this week by AFG, Australia’s largest mortgage broker, which found a strong increase in first-home buyer levels in NSW and Western Australia.
However, Deutsche Bank said household deleveraging would have the greatest impact on house prices during the next few years, which would keep house prices flat until at least the end of 2012.