2010-02-10 17:17:18 - Fast Market Research recommends "Australia Real Estate Report Q1 2010" from Business Monitor International, now available

The Australian economy has defied global trends so far by avoiding a deep recession during the recent financial crisis, thanks to a sound banking regulatory regime and less exposure than many countries to risky loans. It has subsequently grown strongly on the back of increased demand for commodities in China due to that country's stimulus spending package, which focuses on infrastructure. Similarly, the real estate market experienced some, but never disastrous, fallout from the financial crisis. Performance was mixed and residential prices flattened for a time, although it now shows signs of renewed growth, particularly in the major cities. Rising unemployment nevertheless remains a factor. Although the national First Home Owner Grant (FHOG) scheme and the extra boost (the First

Home Owner Boost Scheme) from the federal government's recent stimulus package has offset this weakness to a large degree. The states of New South Wales and Victoria are also adding 'boosts' for first home buyers on top of the federal government's scheme. The federal boost is due to end on June 30 2009 (although it may be extended), and this has of course provided much impetus for first home purchases pre-30 June 2009. Residential rents have continued to rise in all capital cities. Most major cities have significant shortages of rental stock. According to Davis Langdon, the high-rise residential market (especially in Brisbane and Melbourne) is beginning to recover, helped again by the FHOG scheme and low interest rates. Commercial real estate had already started to decline in 2008 and that softness has continued into 2009. Vacancy rates remain high and rental rates are low, not helped by the federal government's plan to financially assist commercial property developers during the financial crisis being defeated by a vote in parliament's upper house Senate in June 2009. Australian commercial property groups say the scheme could proceed later, in a modified form, although signs are the sector could be improving as business activity picks up. The real estate investment trust (REIT) sector appears to be on the rebound after a very poor 2008, due to a recapitalisation. This has reduced the level of gearing and the selling pressure that was affecting the commercial property market. The Westpac-Melbourne Institute Leading Index showed an annualised growth rate of -3.5% in April 2009, compared with worse figures in March and February 2009. This may be an indication that worst of the financial crisis is over, and that it will have been relatively shallow, although a return to economic growth is unlikely before 2010.

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