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The Great Property Debate 2006
Real Estate Institute of NSW President, Mrs Cristine Castle, said the outcome of the Institute’s Great Property Debate, held today at the Westin Grand Ballroom in Sydney, was growing optimism for the Sydney and NSW residential property markets and continued strong growth in commercial markets.
“Greater affordability, better value and realistic prices are luring homebuyers and investors back to the market and well priced properties are selling,” Mrs Castle said.
Mr Louis Christopher, Research Director of Australian Property Monitors agreed that the residential market is likely to reach its bottom as early as the first half of 2006.
“Median house prices had a slight rise in the December quarter 2005, which is the first such rise since the same quarter in 2004.”
“While the results may have been influenced by seasonality, it is nevertheless an indication that we are close to the bottom of the Sydney housing market cycle,” Mr Christopher said.
Mr Christopher said that unit prices have eased due to a current oversupply but that fewer units in the building pipeline and a renewed interest by buyers in residential investment property meant that the market should improve later in the year.
Mr John Peters, Senior Economist with the Commonwealth Bank agreed that the market may have stabilised.
“We have seen a soft landing in terms of house prices,” Mr Peters said.
“This soft and shallow downturn will probably further stabilise this year. Underlying demand is resilient and employment growth and consumer sentiment is still quite strong.”
Mr Peters said the global outlook is for sustained growth and the Australian economy is performing well, particularly in those states exposed to the resources boom.
“We expect growth to pick up pace to over 3 percent in 2006 driven by strong business spending and exports growth, particularly resources exports, which have taken over from consumer spending and housing,” Mr Peters said.
“On the interest rate front we see the Reserve Bank leaving interest rates on hold at 5.5 percent although there is a risk that inflation may move to the higher end of expectations due to the tightening labour market and intensifying broad-based wage pressures.”
Mr John Sears, Forecasting Services Manager for Jones Lang LaSalle said the resources boom was also having a positive impact on commercial property with the outlook for Sydney being good.
“Commercial property remains well valued,” Mr Sears said.
“There are moderate vacancy rates but Sydney is coping well with supply in the pipeline and there has been a turnaround in net absorption.”
“Demand for retail property remains very strong and the rental growth outlook has softened causing valuations to fall to neutral levels, however, the market is not yet expensive.”
“The industrial market has record levels of supply in some areas which is inhibiting rental growth but the market remains reasonably valued.”
REINSW President, Mrs Castle, welcomed the optimism and expertise of the guest speakers and the positive outlook for 2006.
“Interest rates need to be kept on hold in the foreseeable future to allow the continued recovery of the property sector and the NSW Government needs to do more to encourage building and housing to generate economic growth and employment,” Mrs Castle said.
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