Residential and commercial property both performed better than expected during the past year and both markets are on track to deliver solid returns during 2010, industry experts have said.
President of the Real Estate Institute of Australia, David Airey, says most real estate executives viewed the market as dismal earlier this year, but have since changed their tune.
“This year started off a fairly slow year with a tough market in most states, but in the middle of the year we saw signs of recovery and accelerated growth. To such an extent we’ve seen this year end with a pretty normal market, with capital city prices on the rise.”
“The commercial market is still very slow, with the hangover from the so-called global financial crisis. But 2010 is looking good in residential markets with strong buyer demand. The only dampening effect I would put on that is rising interest rates, and that will carry through until people are adapting to normalised rates.”
His comments come as the Real Estate Institute of Victoria released a statement in which it said a straw poll of agents showed 26% of agents expect the next six months to outperform the last, with 61% expecting activity to at least remain the same.
David Green-Morgan, director of commercial property Research and DTZ, says the commercial sector “performed much better than we thought at the beginning of the year.”
“It was all looking quite gloomy and we just weren’t sure how big the drops in values would be. But by July and August the values were not going down as far as we thought, and recent transaction evidence has borne that out.”
“However, what is happening is that we’re going back to more historical norms with the gap between good and poor quality assets is emerging. But as the economy performs well, occupational markets will start to emerge and the values in good assets will certainly start to rise again.”
The comments come as the property market has once again delivered a solid set of results for auction sales. In Melbourne, REIV president Enzo Raimondo said in a statement the result was an indication of the market’s strength over the year.
This weekend’s auctions continued the well-established trend of strong demand and good results over the last eight months with a clearance rate of 83% recorded from the 629 reported results.
This weekend’s sales effectively brings to an end the year for residential property sales and 2009 will be looked back on as a very strong one, second only to 2007.
The total value of last weekend’s auctions and private sales combined come in at $671 million, with the year’s total at $12.1 billion – up from $10.2 billion in 2008. The total clearance rate for the year was 81%.
In Sydney, 154 properties sold out of 202 on the market, resulting in a clearance rate of 71%. Total sales reached $111 million.
In Brisbane, just seven properties went under the hammer out of 20 up for auction, resulting in a clearance rate of 33%. Only six properties sold in Brisbane, with a clearance rate of 46% and total sales worth $3.3 million.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
