Report says ‘residential no longer the brightest spot’
Market analysis shows the property scene is weakening slightly as buyers become 'less optimistic'.
EVEN before the latest inflation surge to 4.6 per cent, Australia’s property market momentum was beginning to soften.
The Australian Property Institute’s Q2 Market Report has the API Index sliding to 6.1 from 7.1 in Q1.
The Index is based on a survey of the API’s 7000 members and ranges from 10 (extremely strong) to 0 (extremely weak).
“The property industry has become less optimistic (or more cautious) with all key asset classes,” the report states.
“Residential is no longer the brightest spot, with market expectations showing more resilience for industrial.
“The property industry is most cautious with office and retail, rating their outlook slightly below the neutral level.”
None of the five largest states is immune from the downturn in market sentiment.
However, the overall property outlook remains positive, especially for Western Australia and Queensland.
WA’s Index is 7.8 (down from 9.0) while Queensland is 7.3 (8.3). South Australia is 6.7 (8.1), Victoria 5.5 (6) while NSW is the basket case at 5.2 (6.2).
The report notes the RBA’s interest rate increases in February and March and the likelihood of another in May.
“Property valuers consider the interest rate outlook as the biggest source of downward pressure on property prices,” the report added.
However, there were still factors sustaining or putting upward pressures on prices such as the 5% Deposit Scheme, continued population growth and insufficient housing supply (for residential); demand for warehouses and technological development; and market demand for specific agricultural products.
