Australian Property Market Showing Signs Of Slowdown

Along with affordability issues and rising interest rates, Australia’s winter slowdown is contributing to slack sales and price falls. Bidders are scarce despite limited new stock of upscale …

Along with affordability issues and rising interest rates, Australia’s winter slowdown is contributing to slack sales and price falls. Bidders are scarce despite limited new stock of upscale property in Australia’s capital cities, while a surge in expected listings in Melbourne may hurt housing prices. See the following article from Property Wire for more on this.

SWAG of Melbourne houses are expected to be put on the market by the end of year.This will push down prices in what has been Australia’s most resilient housing market.

An estimated 35,000 Melbourne houses and apartments will be advertised for sale either privately or by auction in December, according to advisory and forecasting firm SQM Research.

SQM managing director Louis Christopher said this would rival the amount of property for sale in the city after the global financial crisis-induced stockmarket crash in late 2008.

“It was also the point in the housing cycle just before interest rates were about to be cut,” Mr Christopher said.

Falling interest rates and the federal and state first-home owners grants helped the housing

“Melbourne is a candidate to record price falls in the September or December quarters this year,” Mr Christopher said.

These, however, were only likely to be between 1 per cent and 1.5 per cent each quarter.
Brisbane was the other city with a flat housing price outlook, with 34,000 houses expected to be for sale by December compared with 17,000 a year ago.

According to real estate agent DTZ, 5000 new apartments will be offered for sale in inner Brisbane this year, double the normal number, as pent-up demand in the wake of the global financial crisis fuels new building.

“Brisbane also faces long-term affordability issues as the cost of housing, food and fuel have caught up to those of Sydney and Melbourne,” the global real estate agent chain said.
SQM estimates it would take a year to sell all the property on the market in Brisbane, based on the current rate of sales.

Mr Christopher is more bullish on the Sydney housing market, where 29,000 houses are expected to be marketed in December compared with 22,000 a year ago.

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“It’s still an expensive city, no doubt, but developers put down their tools during the GFC and the new supply coming on is not that great,” he said.

Sydney also has a low rental vacancy rate of 1.5 per cent for June compared with the national average of 1.8 per cent, he noted.

In Perth, housing prices were likely to be flat, Mr Christopher said. The number of properties for sale was likely to be 19,000 at the end of the year, compared with the peak of 39,000 in December 2008.

By then a confluence of things happened to cool the market.

The six interest rate rises since October finally bit, the resource super-profits tax was a destabilizing influence and the sharemarket was volatile. And in winter the market simply slows down.

Brian White, chairman of real estate agent chain Ray White, says interest rates can always be blamed for a slowdown, but in the prestige market he noticed the cool-down as debate became more public and aggressive over the resource super-profits tax and words such as “sovereign risk” were bandied about.

“It put a rope around the throat of any market that had depended on mining,” White says.

“Only since the resolution of the controversy has some optimism returned.”

The health of the market will partly be determined by the volume of property for sale.

At the upper end of London’s housing market, prices held up surprisingly well despite the depth of the financial crisis, White says. The market was saved by the lack of stock, as those who could hold on did so, he says.

Nor is there much for sale at the very top end of Australian capital city markets, he notes.

In Sydney, there are only a couple of new prestige listings.

One of the most expensive on offer is Deke and Eve Miskin’s Point Piper mansion, Altona. The eight-bedroom waterfront property, bought for $28m in 2002, was put on the market last month with a $40m-$45m price tag.

Still to find a buyer is the Point Piper waterfront mansion of the late Peter and Ruth Simon, who established the electrical switch manufacturer HPM Industries. The Wolseley Road property was offered at the end of last year with a price of up to $60m.

Ray White Real Estate’s prestige sales division head Michael Finger, who is marketing Altona, says the real test of the luxury market will be in September, when properties are listed for the spring selling season.

White says it’s the classic Sydney winter pattern.”Stock is tight and some is proving difficult to sell,” he says.

But in Melbourne, despite the city’s housing market coming off the boil, he is surprised by its overall strength. Properties are selling before auction as sellers take up a sure bet rather than risk putting their home under the hammer.

“Before, we had five to six potential buyers on a property; now there are one or two, but the properties are still selling”

The Queensland market was hardest hit, White says, particularly in coastal locations.

The middle market is holding up the best at present, he says.

In Sydney, that’s suburbs such as Five Dock and Randwick, where homes are in the $1m-$1.5m price range, he notes.

Last week auction clearance rates in Sydney and Melbourne, fell to a 52-week low of 49.8 per cent and 55.6 per cent respectively, according to Australian Property Monitors.

A year earlier on the corresponding weekend, Sydney auctions cleared 70.5 per cent of homes and Melbourne’s clearance rate was a healthy 78 per cent.

This article has been republished from Property Wire. You can also view this article at
Property Wire, an international real estate news site.

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