The survey’s respondents—composed of national property valuers, financiers, analysts, and fund managers—believe that residential property in Sydney, Melbourne, and Brisbane will remain at the top of the property cycle for some time to come (this year’s results were taken in September and October).
The feedback from respondents correlates with the outlook from developers Stockland and Mirvac. Both companies have said that while the rate of price growth will slow, pent-up demand will remain strong.
Susan Lloyd-Hurwitz, Mirvac’s chief executive officer and managing director, said at the annual meeting in November that conditions remained mixed nationally 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 cloud on the horizon is the ample supply of apartments, with experts warning of the dire consequences of this glut.
The Australian Property Institute's survey uses the “clock system,” where 12am is the peak of the market and 6pm is the trough. Next year, residential property in Sydney and Brisbane is expected to be at the top of the property cycle, at 12am, with Melbourne on the downswing.
Respondents believe Perth will reach the bottom of the property cycle sometime next year.
Michael Zissler, API’s chief executive officer, said low interest rates were the most common driver for increased demand and upswing prices in residential property across Australia. However, as prices increase, even amidst a low-supply environment, more than half (58%) of the Sydney respondents believe 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.”
