In spite of the weakest global economy in 70 years, Australia was the only member of the G20 to avoid recession in 2009. That’s not to say it didn’t slow significantly - being only 0.6% higher in Q3 2009 than a year earlier, but the anticipated job losses that could have devastated the country’s property markets did not eventuate.
Although there was a shift from full to part-time employment for many, the 50-year low mortgage rates plus the government handouts ensured limited distressed property returned to the markets. In fact prices surged in the residential sector from Q1 2009 and there were signs that the commercial market had begun to bottom out from its seven quarter slump in the final quarter of the year.
The outlook for the economy over the next three years is one of continued growth.
GDP is forecast to rise to a more normal 3% in 2010 and 3.2% in 2011, with an above average 4% expected in 2012. Expectations are for job growth to once again surge and some of the projections for Australia’s population will need a continuation of the record high immigration figures of 2009 to be achieved. The challenge for the property market is to ride the stronger economic fundamentals in a period when the stimulus is being removed. The cash rate has already been lifted 3 times in late 2009 and further hikes are expected through to 2012. However, the lift has been from emergency lows and is expected to be gradual. Similarly, fundamentals are in reasonable shape for most markets, with few experiencing too much supply.
Expectations are that tenant demand will lift and although the flow through to rents and values is usually delayed in a commercial property recovery, some growth could well start to emerge towards the second half of this year.
- Read the full Executive Summary at http://www.merchants.net.au/selling/documents.asp