Interest rate shocks fail to dim the great Australian dream
Tuesday, May 22, 2012/
The residential property market stabilised in 2009-10 in line with improvements to domestic, economic and financial conditions.
The resilience of the labour market has maintained consumer confidence levels and minimised the forced sale of residential homes throughout Australia. However, in 2010-11, consumer sentiment turned, with rising interest rates and weak levels of dwelling commencements prevailing in the second half of the financial year. Nonetheless, the market is starting to recover after a brief period of uncertainty.
Over the five years through 2011-12, industry revenue is expected to grow at an average annual rate of 1.5%. IBISWorld estimates that revenue for the residential property operators and developers industry in Australia will increase by about 1.8% in 2011-12 to reach $29.1 billion.
In the future, the industry will go through some minor hardship before renewed success. The interest rate shock has had a greater than expected effect, with consumer sentiment being strongly affected by cost issues such as the carbon tax. However, fundamentally positive economic conditions such as employment and income levels will remain positive, which will promote long-term growth.
Industry at a Glance
Increased access to finance, further population growth and the relative shortage of residential accommodation are expected to further accelerate residential property demand. This growth in demand is likely to be reflected in property and rental value increases during the next five years. As a result, IBISWorld estimates industry revenue will grow by an average annualised rate of about 0.7% over the five years through 2016-17 to reach $30.1 billion.
Products and Markets segmentation
There are several types of residential property in Australia, including separate houses, semi-detached homes and flats. Separate houses or detached homes make up the largest proportion of residential dwellings in Australia, and those that are built by the industry. These houses are freestanding or standalone in their own grounds separated from other dwellings by at least half a metre. Separate homes have dominated the residential sector in Australia over the past 10 years, hovering between 65%-72% of the market. About 80% of households living in separate houses are either completely owned or are in the process of being purchased.
In terms of absolute numbers, building approval values have started to drop in recent years, due to reduced interest in property purchases during the global financial crisis (like every other segment), and since 2010-11 as concerns about proximity to city centres comes to the fore, encouraging higher density development.
Be honest about your situation: How vulnerability helps businesses thrive Sue Parker DARE Group founder
Own it: The 10 things you need to do to manage your personal brand Lisa Stephenson Who Am I Projects founder
Six invaluable lessons: What 20 years in aged care taught me about being an entrepreneur Natasha Chadwick NewDirection Care founder
An entrepreneurial superpower: Eight tips to help develop resilience Adala Bolto ZADI Training co-founder
Going through a lull? Five areas you should invest in when sales drop Tamara Alaveras and Sonia Majkic 3 Phase Marketing co-founders
Stop telling us how busy you are, it's boring and charmless Ian Whitworth Scene Change co-founder
Blandification™ and the state of modern branding Jeffrey Oley The Offices co-founder
Why you should find the right role for the right person — not the other way around Bruce Stronge Outfit founder