Property market on a knife edge
The Australian property market is at a “cross road”, according to a leading property research group.
While prices declined in the majority of capital cities over January, Residex CEO John Edwards said that property was on the tipping point of the cycle.
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“Our data suggests we are moving beyond the bottom of the cycle however the trend is not pronounced,” Mr Edwards said.
While a change is expected from January, where national drops of 0.67 and 1.21 per cent were seen for units and houses respectively, it may be some time until an improvement is made.
“On an Australia-wide basis we do not look as if we are through the worst of the correction phase.
In most capital cities, while we may have reached the bottom of the cycle, there is no strong movement towards positive territory,” he said.
“The next few months will be crucial in determining where markets head.”
Further cuts in price, ongoing corrections and weakness can still be expected, and the Reserve Bank decision not to cut rates was a missed opportunity to fix this, he said.
“The property market is on a knife edge. A rate cut would have had an important impact on affordability and boosting confidence.
“While Australia’s property market does not face the same risks as those that led to the collapse in US housing prices, we face continued headwinds including the high Australian dollar and the high cost of housing. We need to encourage home ownership otherwise we will arrive at a situation where the cost of rentals is unacceptably very high.”