The prevailing tough economic conditions will not hold back the impending recovery in the housing market according to Archicentre, the national building advisory service of the Australian Institute of Architects (AIA).
Robert Caulfield, managing director of Archicentre said that while most potential homebuyers are still currently fairly cautious, strong housing demand and lower interest rate environment are likely to fuel a significant recovery in sales towards the end of this year.
"With the Reserve Bank likely to start reducing interest rates next month, and if commercial banks follow suit, then things will likely ease up for both homeowners and homebuyers, especially for potential first home buyers," said Caulfield.
"We predict that there will be an upturn in the housing market in the last quarter of 2008 and a continued increase in renovation demand, which will probably push prices up in early 2009."
Caulfield pointed out that higher demand coming from higher intake of skilled migrants with significant cash savings and income-earning capability, will likely help boost the sagging sector.
However, at the moment, Caulfield noted that that pre-purchase home inspections across Australia are still 25% lower on a year-on-year basis.
"Pre-purchase inspections are a good indicator of where the market is heading," he said. "It's an early warning system that indicates when, or whether, people are going to buy houses about a month before the auctions or actual purchases. They also occur normally about three months before people organize mortgages."
Based on those figures, Caulfield noted that there will not be a significant improvement in house sale numbers until at least October.
"Essentially, the average homeowner is staying put. Due to the combination of government taxes - especially stamp duty - people are purchasing less, and this is reflected in the current market data.