Prices staying at top of property cycle: Australian Property Institute's property directions survey
Respondents to a new survey from the Australian Property Institute believe residential property in Sydney and Melbourne is reaching the top of the property cycle and markets will remain in a similar position in Melbourne for a further 12 months and in Sydney for another two years.
The majority of respondents believe that interest rates will remain at similar levels for the next year, and be higher in 3 years. They also believe that foreign investment will be at similar levels for the six months, but uncertain of levels over the longer term.
Mike Zissler, API chief executive officer, said a common view among respondents is that overall, demand is outperforming supply, ensuring residential markets remain strong.
“Ninety-two per cent of survey respondents see low interest rates as a significant to very significant driver of Sydney residential property demand and prices," he said.
"The second most significant driver is supply, with 91 percent seeing it as significant to very significant.
“In Melbourne, the two main drivers for residential property demand and prices are low interest rates (with 95 percent of respondents seeing them as a significant to very significant driver) and foreign investment (with 91 per cent of respondents seeing it as a significant to very significant driver).
“Brisbane is similar to the Sydney market, with 95 percent of respondents seeing low interest rates as significant or very significant, and therefore the main driver of demand and prices in the city. Supply is considered the second most significant driver, with 80 per cent seeing it as significant to very significant.
“We also asked respondents about the drivers of demand in Perth. Low interest rates are again considered the most significant driver of demand and prices, however this view is not as strong as in the other cities, with 80 per cent seeing it as a significant or very significant driver.
“Results were split for Sydney, with 58 percent of respondents indicating residential property is in or is entering a bubble, while 42 percent indicate it is not in a bubble.
“Respondents were fairly certain of a bubble in the Melbourne market, with 86 percent of respondents indicating residential property is in or is entering a bubble, while 14 percent believe it is not in a bubble.
“For Brisbane, 42 percent of respondents indicate that residential property is not in a bubble, 52 percent indicate that it is in or is entering a bubble and 5 per cent are unsure.
"For Perth, respondents are more certain, with 90 percent indicating residential property is not in a bubble."
