Australia’s red-hot property markets may pause this weekend as buyers take stock of the $100 billion wiped from the sharemarket in the past three days.
“We expect inquiries to come off during the next few weeks,” said Peter Chittenden, managing director, residential, for Colliers International.
“What we find in events like this is that people slow down, they don’t act in the immediate term. They wait and assess.”
Colliers, which has sold about 4500 new apartments this year, expects the longer-term effect of sharemarket gyrations will be a flight to bricks and mortar as investors seek stability.
If the housing market did slow, it still would be a very robust market, Mr Chittenden said.
He said that given the hot inner-city markets in Sydney and Melbourne, property investors may shift to other areas that had not seen the same price rises, such as western Sydney.
AMP Capital chief economist Shane Oliver said the 1987 stockmarket crash had largely sparked the property boom of 1988-89.
“It’s more complicated now with property doing so well in Sydney and Melbourne — and talk of a bubble — and other areas slowing down,” he said.
In addition, investment property rental yields were unattractively low, while there were regulatory pressures on banks to limit lending to investors and fears of economic weakening that could affect jobs and the ability to service mortgages, he said.
Nervousness about the shares outlook and the mixed story on property investment could see investors shifting to lower-growth capitals in search of better value — meaning Brisbane’s and Adelaide’s residential markets could benefit, Mr Oliver said.
However, most buyers saw property as a long-term investment and were unlikely to make decisions based on the short-term direction of the sharemarket, said David Milton, managing director of CBRE residential projects.
The agency, which expects to sell 7500 apartments nationally this year, believes the heavy sharemarket falls in China are likely to drive more offshore investment into Australian property.
He said interest rates, which were likely to stay low, were a far more important factor.
Brian White, the chairman of agency Ray White, said he had seen no indications that the billions of dollars in share losses had created nervous property buyers.
“A lot of the comment is ‘there goes the threat of another rate rise, you little beauty’,” Mr White said.
This article first appeared in The Australian Business Review.