Accommodation

The Property market - a commentary

Twelve months ago there was widespread concern about significant weakness in the market. Some commentators predicted significant price falls throughout Sydney and indeed the rest of Australia. There was real concern about the depth of demand and a feeling that if the pattern of previous cycles held through, property owners were set to face a significant "hair cut".

That hasn't happened. The headline is that pricing has remained relatively stable

Overall, it is reported that property prices across the whole of Australia will stabilise and certain areas where prices have surged ahead will see a slight correction with prices falling moderately. There will be little room for capital growth for investors for the short term but, as mentioned, barring major external shocks the market will remain strong and stable. After the short term stabilisation and subsequent slow down it is predicted that the Australian property market outlook will return to favorable from 2007.

The Reserve Bank of Australia's decision to keep the official interest-rate on cash (cash rate) unchanged at 5.50 % would be welcomed by home owners and buyers alike.

Keeping rates on hold means vendors and buyers can negotiate with the confidence that the market is stable. If interest rates stay unchanged for the remainder of 2005, most markets in Australia will experience modest growth in both prices and turnover. For many would-be vendors, it is an indication that they shouldn't be holding off selling their properties in hope of a major change in the market.

Of course, the big variable remains the Economy and property investors' confidence in it. Prospects for interest rates and employment will, as always, be the big macro factors that affect our market.