Sydney, Melbourne, Brisbane – property cycles in different phases

Figures released this week by Australian Property Monitors for the first quarter of 2013 show a stark contrast between the major eastern seaboard capitals.

Overall these figures indicate a relatively robust housing market, which as we have noted elsewhere, is mainly due to an under supply of housing generally and lower interest rates.

Jock Bing, CEO, Portfolio Management Services

In Sydney the figures are showing a modest recovery after a long period of lagging prices. The Sydney property market improvement is set to gain strength as pent up demand feeds into a market on the move.

There is a shortage of good investment property in the inner suburban areas where people wish to live. This pushes up yields as vacancy rates fall, a sign that the cycle is gaining momentum.  In Sydney these cycles tend to be shorter and sharper. Also the higher entry prices in Sydney, particularly in housing, mean that not all investors are in a position to take advantage of the opportunities in this market.

The apartment market in Sydney still has some time to run with an overall housing shortage, premium positioned older apartments close to the city, and good transport making very attractive buying for yield conscious investors.

The Melbourne market has held up well with a 3.6 percent rise over the quarter according to the RP Data figures with Melbourne apartment prices still showing a modest rise of 2.6 percent.

The unit price rise in Melbourne is quite robust given the large numbers of apartment projects coming on stream this year. Some of these are still to be absorbed into the market and more settlements are expected in the coming months. We are keeping a close watch for opportunities arising in the Melbourne residential sector.

Brisbane apartment prices have been affected by a large oversupply of new units in a market that is still in recovery after the natural disasters of last year. Portfolio Management Services sees this market as one to watch in the near term, however much depends on how the state handles the emerging signs of a slow down in the resources sector.

Housing is more attractive to traditional residential investors in Brisbane and yields in some inner areas of the city look solid.

Overall the Australian residential property sector’s show of strength is as a result of the flow of cheap money and rising confidence as the Reserve Bank’s policy settings show results.

If you look at the residential property data on a year on year basis, we are cautiously optimistic. However the need for good research is important, as it always has been. We are cautiously optimistic that there are a number of opportunities available for long term property investors who seek the right market intelligence and follow up with due diligence.

For targeted research in specific markets, speak to one of our acquisitions experts today on 9621 1044 or go to Contact us.