Australian Property Returns Sink To16-Year Low

Source : The Business Times, May 21, 2009

(SYDNEY) Total returns for Australian property hit a 16-year low in the latest quarter as capital values continued to drop, property research firm IPD said yesterday.

Total returns, which include income and capital growth, for all property types tumbled to a negative 1.5 per cent for the 12 months to March, the worst performance since December 1993.

Annualised capital growth dropped to a minus 7.6 per cent, the fifth consecutive quarterly fall, compared with a positive 11.6 per cent return a year ago.

'When comparing Australia with other countries, we certainly entered the downturn later but we are catching up faster,' said Goran Ujdur, director of IPD Australia.

'There is a sense that there are further value declines ahead, especially in the next major evaluation round, which is obviously at the end of financial year.'

Capital growth for Australian office buildings also shrank, posting a negative 8.1 per cent in the March quarter, compared with a positive 16.3 per cent a year ago.

Retail assets saw a smaller drop in total returns with a negative 0.8 per cent, but their capital growth logged a negative 6.9 per cent.

Mr Ujdur said that values of smaller neighbourhood shopping centres had overstretched and came down at a faster pace compared with major regional retail assets. -- Reuters