Australia » Market Report

Sydney is a superior indicator of the state of the housing market. And if several recent studies are any indication, the outlook is for stormy weather ahead. Sydney house prices are heading south. Just how far and how fast is questionable, analysts differ on what method of data gathering is most accurate. According to UN Human development Report 2004, Australia was ranked 3rd out of 177 countries in Human Development Report.

When considering the cycle of commercial investment property in Australia, this cycle can be observed and plotted based on the principals of the market movements in Brisbane where in just three years incentives offered to companies who committed to long leases have disappeared and vacancy rates have dropped to their lowest ever recorded figure. Rents payable for grade A space are up almost 60%, rents payable for grade B space are up over 75%. Perth is about a year behind Brisbane and Melbourne is a good few months behind Perth according to BIS Shrapnel because it has taken longer in these markets for development to stop, demand to increase and lease incentives to drop off.

Over the past few years, developments in housing prices have been of significant concern to policy-makers in many countries. Housing represents a major component of household wealth and movements in house prices can materially influence household spending and borrowing decisions. In light of the relevance of housing prices for macroeconomic developments, it is important to be able to assess movements in aggregate housing prices both accurately and on a timely basis.

Mostly people feel that house prices in Australia are overvalued. International Property Brokers predicts that the time is not very far off when the house prices would fall lower. The property market has become so unaffordable it has made difficult for first time buyers to make the purchase. It is an accepted fact that the housing market is slowing down. Declining returns currently being experienced by investors in Australian property are likely to get even worse in 2009. It’s predicted that by 2011 properties in excess of $300,000 will fall by a margin of 20-25%. Australia won’t be hit as hard as US and UK by the financial fallout as it depends more on trade with Asia. Will falling interest rates, investors may start coming back to the market in 2009. Sydney's office market has bright prospects for the next two years but the non-residential property markets in Sydney, Melbourne and Brisbane would fall by 2010.