Housing market strength will bolster the property industry in the year ahead without the threat of a bubble forming, industry leaders say. Speaking at the Property Council of Australia’s national congress in Sydney on Tuesday, Investa’s joint managing director, Ming Long, said in terms of Asian investment, offshore buyers were not driving up property prices.
“Are they driving up prices in residential real estate? I don’t think so – it’s still a small proportion of the market . . . that capital is incredibly important for keeping up supply,” she said.
Ms Long said it was important to note the impact a rise in unemployment would have on confidence, which would be felt in the residential market. For Investa, future growth in the residential market would boost demand for office sites to be converted to residential property. Ms Long was joined on a panel mediated by The Australian Financial Review property editor Robert Harley. Among the topics thrashed out was the outlook for the country’s frothy housing market.
“I don’t think there can be too much offshore investment – what could we do, put up a big fence?” JLL chief executive Stephen Conry said, adding cultural debate around offshore investment was unhealthy.
Rather, the rise in high net worth individuals in Asia, and their willingness to invest in Australia, needed to be seen as an opportunity for growth. Mr Conry said he did not believe there was a residential price bubble, but said prices had “reached their fill” and noted the caution in the RBA minutes. Stockland chief Mark Steinert maintained his view that Sydney was set for a “golden decade” and said there was room for growth in master-planned communities, particularly in areas to be serviced by heavy rail.
Sydney had about four or five years’ worth of housing undersupply, and that underlying demand would prop future capital gains, although further price growth would not be as strong as in the past year.
In terms of supply gains in the residential market since the market began to improve, Mr Steinert said the boost to apartment supply around the inner-city apartment markets may be concerning longer-term, particularly the second-tier stock, as vacancies would rise. He singled out Melbourne and Brisbane’s high approval rates, which could impact rental vacancies.