Where resources are playing a part in the West, prices are doing well. In the East, where values have been high, prices are growing more slowly, such as in Brisbane, or marginally declining elsewhere, such as in Sydney.
That’s the story being told in Macquarie Real Estate’s annual Real Estate Market Outlook released in Sydney yesterday.
According to Macquarie Real Estate’s head of research Rod Cornish, Sydney residential real estate will continue its current downturn phase and he expects it to move into the stabilisation phase in 2007.
“The interest rate rise in May will have an affect and unlike Melbourne which has already moved into the stabilisation phase, Sydney and Brisbane’s shift to the stabilisation phase will be delayed,” Cornish added.
“Whereas in the West, we can expect the momentum in the Perth residential market to continue although at a more moderate pace in the short term. However, the deterioration in affordability, in relation to the rest of Australia will slow Perth’s cycle beyond the next 9-12 months.”
Now in its seventh year entitled “The World Squared”, investigates the state of the global property market and the need to apply fundamental and universal analysis to understanding the real estate markets.
“Real estate investment fundamentals must be applied on a global scale,” Cornish said.
“Australian investors have joined the race around the world for opportunities and yield. This year, the Outlook looks at the fundamental drivers of real estate in our home grown property markets as well as the world’s four dominant economies.”
Cornish rightly believes there has never been more important for investors looking at global property to understand the real estate fundamentals.
“Assessing value against a backdrop of competition for assets and yields will be essential for investors looking to invest offshore,” Cornish added.
“Last year, the market saw a global dash for cash – reflected in yields; this year, it will be necessary to find well-grounded techniques for assessing value against a backdrop of greater competition for assets.
“Just as the basic unit of real estate measurement across the world is the square there are universal measures of value developed by Macquarie to predict property prices both domestically and globally. This goes hand in hand with strong local knowledge and partnerships.”
By Ted McDonnell
