A new CBRE Residential MarketView report suggests the residential property in Sydney, Australia, could suffer negative impact due to financial turmoil in the Eurozone. Sydney has enjoyed stability thanks to an undersupply of homes that has helped boost values and rents, but reductions in credit stemming from the debt crisis abroad may affect the market by sapping prospective homebuyers’ ability to buy and development firms’ ability to build. For now, though, CBRE analysts say the buyer’s market will remain largely unchanged and that any effects will take time to shift market sentiment. For more on this continue reading the following article from Property Wire.
The outlook for city residential property markets in Australia is mixed with Sydney likely to see stability continuing but it could be affected by the eurozone crisis, experts believe.
The New South Wales housing market continues to attract reasonable levels of buyer activity compared to other capital cities, according to a new study by property consultants CBRE.
Its latest Residential MarketView report indicates that while the overall sentiment in Sydney remains weighted towards it being a buyers’ market, capital values have remained relatively stable in comparison to the remainder of the Australian residential market.
CBRE global research and consulting manager Sam Reilly said this stability was linked to the undersupply of housing in the Sydney market, which was translating to in low vacancy rates and strong rental growth.
According to CBRE’s report, Sydney’s vacancy rates have now been the lowest nationally since the middle of 2006, with the current vacancy rate at 1.4% well below the generally accepted market equilibrium of 3%.
On the sales front, entry level price brackets are showing stable levels of buyer activity, with eastern suburbs sales around the $500,000 mark increasing towards the end of 2011. The $500,000 to $1 million range has been a highly traded price bracket in this area, with values stable and selling periods generally being up to three months.
CBRE’s report indicates the lower north shore has continued to be a very price conscious market. According to director for residential mortgage valuations, Peter Fallon, well presented homes are still attracting good levels of interest and selling within reasonable time frames.
‘Buyers are maintaining a bullish approach to advertised property which is placing downward pressure on property prices, particularly those with poor locations or that require further work to complete renovations,’ he explained.
The north west sector has experienced strong demand for the lower and middle price brackets, with interest rate falls in late 2011 and stamp duty concessions driving this activity.
Across Sydney, sales in the prestige bracket have continued to be affected by generally subdued levels of buyer interest with volatility in global financial markets remaining the major factor in restricting confidence for residential property purchases.
According to Reilly, property priced above $2 million has suffered value declines of between 10% to 20% with very little interest in the renovation and resell market. Extended settlement periods have been common in this market with finance generally being difficult to obtain.
Looking ahead, the outlook for 2012 is for a higher risk environment with the crucial finance sector in Sydney under threat from possible reductions in credit due to the current Eurozone crisis.
This article was republished with permission from Property Wire.