News Room - Business/Economics

Posted on 18 Sep 2008

Painful property outlook until 2009 (Australia)

RELIEF is not expected until well into 2009 for painfully high mortgages, flat property values and limited buyers across the housing and commercial property sectors, according to a new survey.

 

Sydney's residential market is holding up the best across the country. However, its office, retail and industrial sectors will remain in a downswing for at least another six to 12 months.

 

The Australian Property Directions Survey released by the Australian Property Institute (NSW Division) states that for the six months to August 31, respondents said the Sydney residential property market is nearing the bottom of the cycle.

 

Expressing similar sentiments to the institute's survey to the end of March that was published earlier this year, respondents said Sydney's office market was the bright spot for the next two years but the non-residential property markets in Sydney, Melbourne and Brisbane would fall by 2010.

 

The institute's NSW president, Chris Egan, said yesterday that the half-yearly survey covers valuers, fund managers, stockbroking analysts and property lenders from 31 banks including the top four, as well as real estate agents and broking firms.

 

"It is predicted that there will be a pick up in 2009, continuing through to 2010 - ahead of the markets in Melbourne and Brisbane," he said.

 

"In the residential market, Sydney is seen as having the best prospects for future growth. Respondents felt that it was currently nearing the bottom of the cycle and that there was potential for growth in 2009, continuing into 2010."

 

Mr Egan said that in relation to commercial property, all three markets are just past their peak. A downswing is forecast for 2009.

 

The institute's research committee chairman, Phil Bennett, said the high cost of borrowing would deter transactions.

 

But he warned values of non-residential properties could continue to decline as the gap widens between returns and costs.

 

Mr Egan said low returns and high costs would also remain a millstone for the listed and unlisted property trust sectors, which own more than 80per cent of the investment-grade commercial property across the country.