THE combination of a weak economy, a rise in interest rates and an over-supply of apartments in the country's three largest cities has led to a five per cent decrease in the price of Australian homes for the first half of this year.
After a three-year period of growth from 1992 to 1994 where inner-city apartments in Sydney, Brisbane and Melbourne experienced an appreciation of nine per cent, the bubble burst late last year as the over-supply reversed the trend resulting in the downturn.
Despite this, the building of apartments continues, partly driven by an increase of Asian emigrants to Australia buying properties in inner-city areas. Alan Liu, regional business development director for Colliers Jardine, said that sales in Australia remained steady.
'The market is not dropping and it's not really rising,' said Mr Liu. 'Because of the Asian money [from new immigrants], the market is holding up.' In Sydney, where Asian buyers account for 40 per cent of all purchases of inner-city apartments, there are currently 16 proposals to build 3,055 units while another 2,000 are under construction.
With the glut in apartments, it is likely that many of these developments will be turned into hotels or for commercial use.
With the general rule being the higher the floor the higher the price, apartments in the Sydney inner-city are selling from A$130,000 (about HK$728,000) to more than $3.6 million.