no spring in property market

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    No spring in property market
    From: Anthony Klan
    November 29, 2005

    THE expected spring bounce in the property market has failed to materialise, with sales of new homes and units below average figures for winter.

    Sales of established homes improved slightly, but stayed stubbornly below the forecast for what has traditionally been one of the busiest times of the year.
    And Australian Property Monitors predicts there will be no lift for months to come.

    It says the best possible scenario is a bottoming-out of the market in the first half of next year, rather than in the December quarter as previously forecast.

    According to the Housing Industry Association, sales of new homes and units rose 2.1per cent nationally in October but remained softer than the traditionally slow winter months.

    "After a slow winter, the expected bounce in spring sales just hasn't happened," HIA chief economist Simon Tennent said. "Home buyers are willing to buy but they're just not able to because of the affordability hurdle."

    APM research director Louis Christopher said sales of established homes had improved in the first two months of spring but the sector remained weaker than anticipated.

    Auction clearance rates are weak, with only 44.1per cent of Sydney properties auctioned last weekend being sold. In Melbourne, the clearance rate was 48.6per cent.

    Mr Tennent said the Melbourne market appeared to have bottomed out but Brisbane prices were expected to fall as much as 5per cent next year.

    "We believe Sydney has also got another 5per cent to fall before it bottoms out late next year," he said.

    National Australia Bank senior treasury economist Spiros Papadopoulos said house prices would remain flat over the next 18 months unless interest rates rose significantly.

    "Given low affordability and the significant growth that we've had over the past four of five years we had to expect some flatness in the market," Mr Papadopoulos said.

    Mr Tennent said high land prices meant more people were opting to live in apartments.

    "A lot of home buyers have given away the dream of getting a house on a block of land and are instead opting for an apartment," he said.

    The lack of new home sales is placing pressure on rents, with new NSW government data showing rents rose 3.6 per cent in the September quarter.

    Rents typically rise about 4 per cent a year.

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