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Australia's million-dollar market cooling? - 30 June 2010

Million dollar properties in Australia are selling at a rate of one every two hours in Australia but there are signs that the red hot real estate market is cooling.

The equivalent of 12 $1 million plus homes have been sold each day at auctions for the past three weekends, according to an analysis of the figures by Melbourne based James Buyers Advocates.

‘There has been an incredible 180 sales over a million in the last fortnight, said spokesman Mal James.

Robert Larocca, spokesman for the Real Estate Institute of Victoria confirmed record numbers of properties in this price bracket are being sold but he believes the market is starting to cool. ‘Sellers are not getting the increases that we saw three months ago,’ he said.

But analysts are divided over whether this is a sign of the market cooling in the longer term or just the usual winter seasonal drop off. Philip Kingston of Gary Peer Real Estate, said the property market was still performing but was much more normal than it was just a few months ago.

‘The reality is we were living in an unsustainable market. But as long as vendors are realistic, buyers are more than happy to perform,’ he said.

However, Real Estate Institute of Australia president David Airey disagrees and said that while things were normalising, the sector could be in for a bumpy ride in the not too distant future. ‘This is not a market going to offer premium price for property being sold,’ he said.

A key will be tax proposals and unemployment levels, he believes. ‘I think if the resource super profits tax is made reality it will have quite a negative impact on the housing market. The impact on employment and investment in the mining sector will ultimately filter back to the economy and filter back to property and how willing people are to invest,’ he explained.

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