Australia apartment sector set to soften in 2016
April 05, 2016 - Australia
Australia’s apartment sector could see a dropping off in demand in 2016, says leading global agent, Knight Frank.
In 2015, the national median apartment price surge and rents rose, but negative global economic sentiment, share market volatility, weak commodity pricing and the collapse of the Dick Smith and Masters retail chains in the first month of 2016 may signal a change in fortune for the residential apartment market.
The sector is still likely to see rises in 2016, but at a lesser extent than in the previous 12 months, says Paul Savitz, Associate Director of Consulting & Research Services, in Knight Frank’s latest Australia Property Market Research Briefing.
The comments come after the National Australia Bank predicted in its latest sector forecast that apartment prices will fall 1.2% in 2016 and that foreign investor interest is falling.
Several other factors are contributing to the changing economic mood, says Knight Frank, including heavy falls (6% during January) in the ASX 200 share market.
One of the main reasons is a continuing fall in oil price to below $US28 a barrel during January. However, Australian interest rates are likely to remain low as a result.
In addition China’s economic growth rate, although still expanding, slowed to a 25-year low of 6.9% in 2015, reigniting worries about the health of the world’s second-largest economy and one of Australia’s largest trade partners, which could force changes to the Reserve Bank of Australia’s economic policy, especially if the Australian dollar strengthens against the Chinese Renminbi.
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