Turnaround brings joy Down Under
PROPERTY specialists are heralding 1996 as the turnaround year in the Australian residential sector following several years of recession.
Michael Bentley, Asia director of Central Equity, backed claims from the Real Estate Institute of Australia (REIA) that 'the property market is on the way up again'.
Prices edged up in Sydney, Melbourne, Brisbane and Perth between January and October last year, according to the REIA.
The biggest growth was recorded in Sydney, where prices rose 3.4 per cent. Melbourne was the second hot spot, with a 2.6 per cent increase, while in both Perth and Brisbane capital values rose 0.6 per cent.
Mr Bentley said there were 'positive signs' of resurgence in the Sydney and Melbourne residential markets after a slump lasting nearly six years.
Most expatriate buyers were investors who anticipated eventually living in the property they had purchased, he said.
Most Australian expatriates looked to buy in their home towns, with Sydney the most popular location. Up to 20 per cent of expatriate buyers were British.
Investors made gains as the rental market in the two cities was at its strongest for between 10 and 15 years.
Sydney and Melbourne apartment rents rose by more than 6 per cent last year, according to REIA figures.
Meantime, in Sydney's house leasing market, rents shot up by 20 per cent.
However, Mr Bentley said the rental market for houses was comparatively small, so the figures could appear misleading for Sydney's overall rental market.
The Perth and Brisbane rental markets had been relatively soft, though Brisbane's apartment rents had risen 10.3 per cent last year. Rents for apartments in Perth rose by 7.2 per cent.
Brisbane had also enjoyed Australia's highest vacancy rate of 5 per cent, which was considered extremely large by property professionals, Mr Bentley said. Meanwhile, investors could expect their returns of between 6 and 7 per cent on rental properties in Sydney and Melbourne to rise this year, he said.
In Sydney, home buyers and investors could expect the housing sales and leasing markets to go on a roller-coaster ride during the years leading up to and immediately after the 2000 Olympic Games.
Matthew Georgeson, Hong Kong office manager of Ben Boyd, said that while Sydney's housing market would strengthen during that period, lettings and sales would soften immediately afterwards, with the city likely to suffer from a post-Games hangover.
However, the housing sector would then recover due to the added value given to residential neighbourhoods by beautification and infrastructure projects undertaken as part of the Games, he said.
Colliers Jardine data shows that a prime three-bedroom Sydney apartment cost between A$3,200 (HK$19,296) and A$7,500 per square metre to buy in December last year.
Meanwhile, Patrick Oliver, Hong Kong-based property consultant at Central Equity, said Hong Kong-based expatriate buyers were participating in a transformation of the Melbourne residential sector.
Expatriates and domestic buyers were showing new interest in buying homes in the inner city, Mr Oliver said. A slump in Melbourne's commercial property sector, had pushed down inner city land values, which had made residential property development profitable.
Younger people, in particular, were taking advantage of buying affordable inner city high-rise homes so they could enjoy a city-based lifestyle and be closer to work.
According to Colliers, an up-market three-bedroom Melbourne apartment cost between $2,423 and $3,962 per sq m to buy last December.
In Perth, it is a buyer's market due to an over-abundance of homes.
According to Colliers, the residential property market was stagnant in 1995 and again last year.
A luxury three-bedroom Perth apartment cost between $2,000 and $2,500 per sq m in December 1996, Colliers figures show.
In Brisbane, similar apartments cost between $3,400 and $4,800 per sq m and in Adelaide, between $1,800 and $2,200 per sq m.