One for Clones

Residential property on track for soft landing
October 24, 2005 – 1:42PM Sydney Morning Herald

Australia’s residential property market remains on track for a soft landing and is unlikely to experience a sharp price correction, a leading ratings agency says.

A recent report from Standard and Poor’s (S&P) on Australia’s housing sector said there was a limited downside risk for residential property prices.

S&P Australasian managing director Chris Dalton said Australia’s key economic performance indicators pointed to stability in the housing market, despite the sector coming off an extremely strong run in prices.

“Our opinion is that Australia’s underlying economic fundamentals, including limited inflationary pressures, low interest rates, low unemployment, steady net overseas migration and reasonable consumer confidence will continue to limit the downside risk for property prices,” Mr Dalton said.

Price stability has defied previous expectations of a burst in the housing “bubble” early last year, with growth slowing in most markets and modest falls occurring in others, particularly Sydney and Melbourne.
AdvertisementAdvertisement

S&P credit analyst Gary Tucker said that, although there was clear evidence of contracting residential property market, the outlook was not as bleak as some observers had suggested.

“While the surge in investor-driven activity has slowed and is now back to more normal levels – and anecdotal evidence suggests demand from first homebuyers is weakening – this is more than compensated for by a range of positive economic fundamentals,” Mr Tucker said.

“One possible exception is the outlook for high density, inner-city apartment markets, which is less certain.

“But, one weak niche market in a country of 5.25 million homeowners falls far short of a housing slump.”

Mr Tucker said arrears remained at very low levels, based on S&P’s monitoring of residential mortgage loans in Australia and New Zealand.

“The overall trend in arrears on prime, sub-prime, and nonconforming residential mortgage loans securitised in Australia and New Zealand has been relatively constant over the past few months,” Mr Tucker said.

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.