Mark Mendel

Australian Property Outlook for 2010

Australian Property Outlook for 2010

I hope everyone had a fantastic break over the festive season. We at Find Investment Property wish everyone all the best for 2010.

In the first week of the year, the Australian Financial Review had a summary of each of the property markets across Australia. Below is a brief summary from each of the stories that appeared in the paper from the 4th January through to the 8th January 2010. The articles cover the Melbourne Property Market, Sydney Property Market, Queensland Property Market, Western Australian Property Market, Tasmanian and the Adelaide Property Markets.

In each of these articles, the journalist has interviewed a few people in the relevant states property industry that may have some bias towards each state, thus all pushing a positive sentiment for their respective property markets.

Having said this I do think they all have good arguments for why buying in each area should see capital growth occur in 2010.

Melbourne Property Outlook 2010

Comments below are from Cameron Anderson, a Director at Red C and Canopi Homes. He previously was in a senior management position at Stockland.

  • 2009 property market was fuelled by federal government grants and Melbourne’s appetite for new homes (Due to Stamp Duty Savings)
  • Cautious outlook for 2010 – median growth expected to be 3% before the market picks up steam in 2011.
  • RP Data stated Melbourne’s median price grew 15% for the first 9 months of the year
  • Little supply of apartments in the pipeline at the moment
  • Rental pressure in Melbourne and it’s growing because the banks have been reluctant to lend money to high-rise developers
  • Big drivers for property prices include supply constraints and population growth

Other comments on the Melbourne property market from Angie Zigomanis at BIS Shrapnel and Tim Lawless at RP Data Research

  • Expected to have solid growth through the year as upgraders and investors take over from first home buyers
  • Higher interest rates will slow growth down from the highs of 2009
  • Late recovery in 2009 may show that first home buyers are less sensitive to rising interest rates
  • New development in Melbourne is falling short of Melbourne’s migrant-driven population growth
  • 2009 price growth was helped by cashed up Chinese buyers which is expected to continue into 2010

Sydney Property Outlook 2010

Comments below are from Brian Haratsis from MacroPlan Australia and Rob Ellis from Property Insights

  • Population boom to lift prices
  • People that can afford to buy now will stand to benefit the most
  • Sydney expected to see the fastest population growth in 15 years
  • Climbing prices in South-East Queensland have slowed migration from NSW to QLD
  • Same levels of international migration plus high birth rate levels
  • Employment generated population growth – young brains from around the world will come to work in Sydney-based financial services, IT and Business services
  • Apartment market is being starved of stock owing to tight lending practices that restrict developers by loan to value ratios plus high levels of pre-sales
  • Rents poised to soar even higher due to the shortage of rental accommodation, especially with rising interest rates deterring some people from buying
  • Prestige property to remain flat for the next 24 months before a potential boom in the high end market
    10% price growth for 2010 wouldn’t be a surprise

Comments below are from Louis Christopher of SQM Research and Jason Anderson from BIS Shrapnel

  • 6 – 8% price growth expected in the next 12 months
  • Nothing to indicate buying trend will stop or slow
  • Price growth in 2009 was 11.6% but affordability was its lowest level since 2002 because interest rates were so low
  • Prestige prices (those over $2m) to rise by 12 to 15% in 2010
  • Sydney will face an ‘extreme’ shortage of rental properties, worse than any other state
  • Rental demand would boost demand for properties in outer suburbs which could result in price growth of 10%

Perth Property Outlook 2010

Comments below are from Nigel Satterley from Satterley Property Group, Western Australia’s largest private residential property developer.

  • Perth property prices poised for a decade of strong growth
  • 6% expected in 2010 with increases of 7 – 10% over the next 7 to 8 years
  • Perth property prices fell by as much as 25% during the downturn
  • Population growth and growing confidence affecting the market
  • Demand is increasing for premium property
  • Medium house price in Perth in September 09 was $462,000
  • Prior to 2008, Perth’s property prices doubled in 4 years as demand outstripped supply
  • Bank funding for property developments will remain constrained

Adelaide Property Outlook 2010

Comments below are from Michael Brock, Managing Director of Brock Real Estate and president of Real Estate Institute of South Australia.

  • Enormous untapped potential in the real estate market
  • Adelaide soon to assert itself as one of the most attractive investment destinations in the country
  • 2009 saw house prices jump 5% and growth is predicted to double in 2010
  • Adelaide’s median house price in September 09 was $421,765
  • Property investors now taking the place of first home buyers
  • Population Growth expected from skilled migrants and those serving the defence and mining industries
  • Adelaide vacancy rate is 1.2% while North Adelaide is only 0.2%
  • Many new apartment projects on hold due to finance obligations which can’t be met by Developers

Tasmania Property Outlook 2010

Comments below are from Tim Lawless, Research Director at RP Data

  • Could perform well in 2010 due to lifestyle buyers entering the market
  • Houses in Hobart are $140,000 cheaper than the national capital city average with an average price of $330,000
  • Units average $270,000, $120,000 cheaper than the capital city average
  • Tasmania does not have strong population growth or a large economic base
  • Rental returns in Tasmania are above 5% with vacancy rates below 2%
  • Population growth is just over 1% driven by migrants, retirees and younger families seeking affordable housing

Queensland Property Outlook 2010

Comments below are from Wayne Rex, President of The Property Council in Queensland

  • Brisbane property prices increased 6.9% in the first 11 months of 2009
  • South East Queensland has seen a stabilisation of prices and turnover
  • Building Approval levels have dropped to low levels not seen since the 1980’s
  • Many house and land packages still available in South East Queensland for under $425,000
  • Release rate of new stock and lack of competition is affecting prices
  • Queensland property market will be steady for the first 6 months of the year as people will still remain cautious
  • Funding still difficult to attain along with substantial pre-sales

Other comments from Bill Morris, Rod Cornish (Macquarie Capital Advisors) and Lachlan Walker (Colliers International)

  • Still not enough homes being built in Queensland
  • South East Queensland saw a population increase of 75,000 in 2008-09 with a need for 30,000 homes, yet only 17,000 were built
  • Interstate migration has dropped in Queensland (Victoria now leading the way), there is still a high number of people coming from overseas
  • Developers still finding it difficult to attain finance
  • Developers can’t buy land at the right price meaning they can produce a home at affordable levels (under $500,000)
  • QLD suffering from a shortage but Sydney supply shortage is more severe
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7 Responses to “Australian Property Outlook for 2010”

  • There is a cautious outlook for Melbourne, but I think its still a good investment for the long term. It is Australia’s fastest growing city.

  • Simone says:

    Why the cautious outlook? Can you give me more detail
    thanks

  • Some forecasters are still expecting to see a major price correction some time in the next twelve months. This idea is held up by the experiences of similar economies internationally.

    I find it hard to believe though, especially when you read through all the statistics regarding undersupply of housing in Australia. In particular our major capitals.

  • I think you hit the nail on the head with the comment about undersupply of housing Ben. That issue alone makes it very difficult to compare property investing in Melbourne and Australia generally to other country’s economic experiences.

  • I found all the relevant information about different properties in here. this way I was able to comparison between different properties. thanks for sharing

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  • The organisations who collect auction data tend to adopt varying geographic definitions for each city that the auction results relate to. For example, city centre vs CBD.
    Australian Property Forum’s auction results thread includes clearance rate data from APM, RPData and the Real Estate Institutes. These are published each Saturday evening
    Auction Results Sydney
    Some organisations, including some real estate bodies, include even properties that sold after auction in the total sold figure. This results in a higher reported auction clearance rate.
    The most useful “bottom-line” auction clearance rate calculation includes all reported auctions, even those auctions that were initially listed but then withdrawn prior to the arranged auction date.
    Auction Results Melbourne
    The inclusion of some or all of the five potential auction result outcomes in the clearance rate calculation will obviously affect the initial reported auction result.

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