Falling dollar fuels australian apartment sales

Photo: Roman Emin

The falling dollar is helping to fuel sales of apartments in Australia.

Turnover in the sector rose in the first quarter of 2015, according to a new report from Knight Fran. Turnover jumped 6.1 per cent with almost 159,200 units sold in Australia over the year ending March 2015. A total of 122,770 were sold in the capital cities, with Brisbane leading the way thanks to an annual rise of 22.5 per cent, followed by the Melbourne area (15.5 per cent).

Many of the eight capitals, though, recorded softer results, notes the report.

Capital value growth totalled just 0.3 per cent month-on-month and 5.3 per cent year-on-year. Sydney continues to hold the highest median price ($620,000) and weekly rent ($550) of all capital cities in the country. Sydney, though, saw prices jump 2.2 per cent quarter-on-quarter, slightly lower than the 3.6 per cent recorded in the previous quarter.

The metropolitan areas of Perth (-4.1 per cent), Darwin (-1.7 per cent), Adelaide (-0.3 per cent) and Melbourne (-0.1 per cent) saw price decline on a quarterly basis.

"The Australian economy is currently travelling at a modest pace," notes the estate agent, with growth recorded at 2.5 per cent per annum and unemployment falling to 6 per cent in the month of May.

To lift low inflation and sustain growth, the Reserve Bank of Australia reduced the official cash rate in May by 25 bps to 2 per cent, and this remained unchanged in June 2015.

"The property market has been aided by this record low interest-rate environment with lending finance continuing to be dominated by the investor market," says Michelle Ciesielski, Associate Director - Residential Research at Knight Frank Australia.

At the same time, the weaker dollar has continued to attract foreign buyers.

"The government continues to encourage foreign investment into the local
apartment market as it contributes immensely to the local economy by stimulating construction activity increasing housing stock across the country. Current regulations limit foreign investment to new properties, that add to
the housing supply," continues Ciesielski.

As of 1st December 2015, the Australian federal government will introduce an initial fee of at least $5,000 for all foreigners purchasing into the Australian property market.

The Victorian State Government has also announced two additional new taxes for foreign investors purchasing property in Victoria: as of today, foreign investors will be taxed 3 per cent of the purchase price, while foreign owners will be charged a land tax of 0.5 per cent, if their property remains vacant.