Australian Property News

Housing correction unlikely

Posted on Thursday, September 02 2010 at 2:21 PM

A major housing correction in Australia isn't likely due to better than expected retail spending and building approval figures from the Australian Bureau of Statistics, according to Chan and Naylor.

"While a housing correction cannot be ruled out, the latest consumer spending and building approvals provide a barometer of overall economic confidence," says Chan and Naylor chief executive Sal Carrero.

"It's hard to imagine a major housing price correction in an environment where interest rates and employment remain historically low."

"Unlike economies in Europe and the United States, Australia has the added advantage of being able to drop interest rates significantly should the economy deteriorate. This would have a significant economic stimulatory impact."

Carrero says some capital city markets, including Sydney, still have strong rental growth which will help support home prices.

"Increasing yields on investment property will support investor confidence in the market and indicates there is still value to be had for buyers," he says.

"The property market continues to offer good prospects over the medium to long term."

Homebuyers should view property as an investment for the medium to long term, says Carrero, to protect themselves against market volatility and unknown global economic factors.