The stellar run of the retail property sector has peaked, stalled by rising interest rates, according to a new survey of sentiment towards property.
The twice-yearly study by the Australian Property Institute showed retail property had entered "the early stages of a downswing cycle" in three cities Melbourne, Sydney and Brisbane.
Tom Webster, the institute's NSW President, said softer consumer spending in shopping centres would flow through to lower rents and valuations.
But the survey did not attempt to quantify the effect on the retail sector.
Mr Webster expressed surprise at the strong correlation between interest rates and both the retail and residential markets. The survey, released yesterday, showed that 97 per cent and 70 per cent of respondents, respectively, said that interest rate increases had a negative effect on these two sectors.
"We did not anticipate the reaction to be so strong," he said.
Mr Webster said with another rate increase expected in the next six months, respondents expected confidence in residential and retail markets to be further undermined.
Another rise in interest rates would further adversely affect the investment unit market, he said.
Commercial properties in Sydney and Melbourne were expected to perform strongly in the next three years.
The commercial sector in these cities was not expected to peak until 2008.
Based on expectations of a continuing boom in the resource sector, respondents also tipped rapid growth to continue in the Perth commercial sector.
Brisbane's office market, which had enjoyed rapid growth, was likely to peak next year and started on a "downswing" in 2008. |
Commercial Property Alert
Commercial Agent Search
Commercial Agent Login
Home
realestate.com.au