Although housing bubble concerns have heightened, experts have a generally positive outlook for Australia’s property markets for the year ahead, predicting continued buoyancy for at least another year. This is according to the Australian Property Institute’s 36th Property Directions Survey, the results of which were taken in September and October.
Survey respondents—comprising national property valuers, financiers, analysts, and fund managers—expect residential property in Sydney, Melbourne, and Brisbane to hold fast at the top of the property cycle for a while longer.
The survey’s findings are in line with predictions from developers Stockland and Mirvac, both of whom have said that demand will remain strong even with the rate of price growth slowing.
Speaking at Mirvac’s annual meeting in November, chief executive officer and managing director Susan Lloyd-Hurwitz said that conditions remained mixed across the nation in the residential sector.
“In Sydney and Melbourne, where we have the most exposure, indicators, such as auction clearance rates, point to solid demand, supported by a competitive lending environment and increasing urban population growth,” Lloyd-Hurwitz said. “Price growth remains positive in Sydney and Melbourne, relatively steady in Brisbane and weak to steady in Perth.”
The only thing holding the markets back is the ample supply of apartments, which plenty of experts have warned about.
The Australian Property Institute’s survey collects responses using the “clock system,” with 12am being the peak of the market and 6pm the trough. It’s expected that next year, Sydney and Brisbane’s residential property markets will be at the 12am peak of the property cycle, with Melbourne on the downswing.
Perth will hit the bottom of its property cycle sometime next year, say respondents.
Michael Zissler, API’s chief executive officer, said the increases in demand and values in residential property across Australia were being driven primarily by low interest rates. However, with prices rising at current rates, even in a low-supply environment, over half (58%) of respondents from Sydney expressed concerns that residential property is in, or is entering, a bubble.
“In Melbourne, the two main drivers for residential property demand and prices are low interest rates, with 95 per cent of respondents seeing them as a significant to very significant driver, and foreign investment, with 91 per cent of respondents seeing it as a significant to very significant driver,” Zissler said.
“Brisbane is similar to the Sydney market, with 95 per cent of respondents seeing low interest rates as significant or very significant, and therefore the main driver of demand and prices in the city. Supply is considered the second most significant driver, with 80 per cent seeing it as significant to very significant.”