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Is the property boom really over?.It seems like Sydney is copping it the hardest.

http://www.skyscrapercity.com/newthread.php?do=newthread&f=370



Property sector sinking fast

By Josh Gordon
Economics Correspondent
Canberra
May 4, 2005


New apartment construction has stalled and Mirvac has warned of a looming profit squeeze.

A dramatic drop in apartment construction has put the brakes on property, with ramifications across the economy.

Australia's property sector is slowing at a higher rate than expected, confirming that interest rates will remain on hold and raising fears that builders will be forced to shed workers to cope with crumbling profits.

As the Reserve Bank's board met yesterday to discuss interest rates, new figures from the Bureau of Statistics revealed building approvals plunged by 6.8 per cent in March, to be almost 20 per cent lower than a year earlier.

The slowdown has already started to flow through to the sharemarket, with property developer Mirvac yesterday warning of a looming profit squeeze triggered by the construction slump.

The fall, taking the number of approvals to the lowest level since May 2001, was driven entirely by a 21 per cent drop in the number of apartment approvals. Approvals to build houses actually grew by 0.5 per cent during the month.

Although the building sector only accounts for about 5 per cent of the national economy, it can have huge ramifications for profits and growth because it is employment intensive and subject to violent fluctuations.

tJust a week from the federal budget, the slowdown will add to worries that the economy is in danger of stalling. Economists are concerned that drought is again a major issue for the economy, bringing into question federal Treasury's prediction that exports are set to recover after a dismal performance last year.

Commsec chief economist Craig James said if the situation worsened, the Reserve might even be forced cut interest rates to take pressure off farmers.

The Bureau of Meteorology recorded an average national temperature of 26.9 degrees for the first four months of the year, the hottest January to April period on record. Average rainfall was the second lowest on record.

Farmers are warning that without rain in the next month, the upcoming winter harvest could be lost, costing Australia billions of dollars in lost export revenue.

In March, Victoria defied the national construction trend, recording a 3.6 per cent increase in building approvals. Sydney, the epicentre of the building boom in 2003 and 2004, recorded the biggest fall, with approvals down 29 per cent during the month.

Meanwhile, a business survey by the Australian Chamber of Commerce and Industry and St George Bank warned of falling sales, employment and profits in the March quarter.

Chamber chief executive Peter Hendy said the Reserve had no choice but to leave interest rates on hold, warning that lower profits would push the unemployment rate higher.

"The survey shows the economy still growing but it's weaker than it has been," Mr Hendy said.

The Reserve last raised interest rates in March, the first increase for 15 months.

After warning of looming inflationary pressures, financial markets had expected it to deliver a second blow, however most economists now believe rates will remain on hold.
 

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its not just happening in Sydney, its also happening in Melbourne and brisbane.
Sydney is now finally getting back into office tower construction. We will see the start of some big ones this year which will be g00d.
 

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choose your stats

NSW -
original flavor: -13%
seasonally adjusted: -29%
trend: 1.9%

Vic -
original: 7%
seasonally adjusted: 3.6%
trend: 0.3%

It also isn't like Victoria was the only state to have positive (seasonally adjusted) numbers....SA had an increase of 26.2%
 

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In a market of rising interest rates, often all markets slow down. after so much building growth in sydney, etc with low interest rates, its natural that there is no need to build new homes.
As there would be an excess of homes and people are scared of rising interest rates and so will wait to see where the market is going. So the market is slow.

A lot of trends that go on this way can change quickly depending on how the local market swings. Building will again pick up if interest rates again remain the same. People will realise that the low interest rates of last year where a low freak rather then normal low.
 

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Sydney's metro cities are experiencing good times. North sydney & Chatswood are still building skyscrapers and also the southern suburbs are going great.
 

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most of these companies (large) would be borrowing cash from overseas at this time, so with highish aussie dollar, and very low overseas interest rates, (states, japan, etc) most construction where needed (and where money could be made) will go ahead.

as interest rates go up, aussie dollar goes up and so its easier for large firms to borrow from over seas. but harder for small construction. but so many more factors etc
 

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In Brisbane all market have basically softened other than new home construction.
 

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I think the extra taxes introduced by Carr (exit tax for example) has also had its effect in Syd. There is talk that he will remove the tax. They are really just trying to make up for the 3bil that NSW loses to the other states i think.
But i'll agree with Cul, Syd is def not booming, but we still have 3 150m+ towers (or 22uc) and there are many many more in the pipline (biggies include Bligh and JB) so its not as gloomy- it looks like Syd is just cooling off for the next cycle.

Btw------> LIVERPOOL FC, you will never walk alone!!! Europe here we come!
 

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ABS said:
In Brisbane all market have basically softened other than new home construction.
Hopefully this will bring construction prices down a little. Developers don't want to build anything in the current climate because costs are so high - even though the market is willing in terms of the need for office space and new apartments.

jt
 

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redstar said:
my prediction.... when the boom slows down adelaides goes up then when the boom arrives again adelaide goes down.

Its true what they say what comes up must come down.
yeah,looks like Adelaide, Perth & Darwin will continue to prosper with new inner city units.They are just starting.
 

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CULWULLA said:
its not just happening in Sydney, its also happening in Melbourne and brisbane.
...then why did they say this?
In March, Victoria defied the national construction trend, recording a 3.6 per cent increase in building approvals. Sydney, the epicentre of the building boom in 2003 and 2004, recorded the biggest fall, with approvals down 29 per cent during the month.
 
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