The residential property market was on the road to recovery, with the upturn expected to continue through to 2011, the Australian Property Institute’s (API) Australian Property Directions Survey has found.

“The Australian Property Directions Survey is widely regarded as is one of the most credible sources in Australia for gauging sentiment among property professionals.

“Respondents to the survey are Valuers, Fund Managers, Property Analysts and Property Financiers,” API NSW President Mr Robert Hecek said today.

“After a dramatic fall in sentiment in the last survey, respondents are now much more upbeat when it comes to the outlook for the property market,” Mr Hecek said today.

Two Year Outlook – Commercial, Industrial, Retail and Residential

“The Australian Property Directions Survey uses property clocks to gauge the position within the property cycle for all property classes – Commercial, Industrial, Retail and Residential in Sydney, Melbourne and Brisbane,” Mr Hecek said.

“Residential property is leading the way.

“Sydney and Melbourne are already seen as being on the upswing, and will be joined by Brisbane in 2010. All three markets are anticipated to grow through 2011,” Mr Hecek said.

Mr Hecek said that the survey found that the other classes of property – retail, industrial and commercial were all seen as nearing the bottom of the cycle, with some growth beginning next year and all markets being on the upswing by 2011.

Scaling Back of First Home Owners Boost

The majority of respondents, 70%, have predicted that the scaling back and removal of the first Home Owners Boost would have a significant impact on residential properties valued at less than $500,000.

“This is not surprising, as it is this lower end of the market that has been supported by the boost in assistance that the Commonwealth provided to first home owners.

“The majority of respondents to the survey, 62%, also felt that the scaling back and removal of the First Home Owners Boost would have an impact on the broader economy,” Mr Hecek said.

Financing Costs

“The cost of finance continues to be a cause of concern within the property industry.

“A big majority of respondents, 76%, are predicting the cost of finance to increase,” Mr Hecek said.

Impact on Property of the volatility of the stock market

The respondents’ predictions for the impact on property of price movements and volatility on the stock market have improved since the April survey.

“In April, the vast majority of respondents saw an adverse impact on commercial, industrial, retail property, and listed/unlisted trusts and syndicates.

The majority of respondents now see a beneficial to neutral impact.

“Predictions for the impact on residential property remain the best among the property classes with 65% seeing a beneficial impact,” Mr Hecek said.

Change in invested capital for listed and unlisted property trusts and syndicates over next 12 months

“Sentiment in relation to the change in invested capital for both the listed and unlisted property trust markets has improved since.

“A majority of respondents see domestic and listed trusts as having no investment change to moderate growth over the next twelve months.

“International listed and unlisted property trusts were seen as having a moderate investment decline to no change over the next year,” Mr Hecek said.

Non-residential Property Sector vs Equity Market

“A larger majority of respondents in September than April felt that non-residential property is unlikely to out perform the equity markets over the next year.

“Sentiment for the non residential property sector out performing the equities market improves for three years out and is more positive again 5 years out,” Mr Hecek said.

Growth Projections Above CPI – Commercial, Retail and Industrial

Similarly to September last year, respondents see market values and rents falling for commercial, industrial and retail property in the 3 cities – Sydney, Melbourne and Brisbane.

“Commercial property in Brisbane is predicted to suffer the biggest fall, with market rentals predicted to fall by 9.5% below CPI,” Mr Hecek said.

Leasing Incentives

All respondents see lease incentives are seen as a feature of all Australian capital cities markets.

“Since April, the predictions overall on the current level of lease incentives have increased with more respondents seeing levels in the 20-29% range and increased movement to the ? 30% range for Lower Grade property,” Mr Hecek said

Mr Hecek thanked all those who took the time to respond to the survey.

“The survey is widely distributed to property professionals. Without their co-operation, the Property Directions Survey would not be the credible and valuable resource that it has become,” Mr Hecek said.

The next Australian Property Directions Survey was due to be released in September 2009.

Respondents to the API Property Directions Survey
AMP Capital Investors
ANZ Bank
Bankwest
Capital Finance Australia
CB Richard Ellis
Chesterton International
Citigroup
Colliers International
Colonial First State Global
Commonwealth Bank of Australia
Cushman & Wakefield
DEXUS Property Group
Ernst & Young
GE Real Estate
Goldman Sachs JB Were
Goodman International
GPT Group
Herron Todd White
ING Real Estate
Investa Property Group
Investec Bank (Australia)
Jones Lang LaSalle
Knight Frank Valuations
LandMark White
Lend Lease
Lend Lease Investments Management
m3property
Macquarie Bank
Mirvac
National Australia Bank
Preston Rowe Paterson
Savills
Valad
Westpac

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