Caution Hits Australian Property Market

After escaping largely unharmed from the global financial crisis, Australian property prices have boomed over the last couple of years.  However, there are now signs that the property market is cooling in the country, making it more affordable for overseas investors to buy property in Australia.

The Sydney Morning Herald reports that ‘dramatic price growth, speculation and wild expectations have waned, replaced by subdued prices, caution and realism.’

Realistic pricing the key to a sale

The newspaper reports that there are still buyers in the Australian property market, but that they are driving a hard bargain on prices.  Property sales are still happening, but only if ‘vendors realise the new norm is prices that mostly mirror those of the past few years.’

A leading estate agent, Janusz Hooker from the LJ Hooker group, recently suggested that people have formed the view that capital appreciation was going to be lower in the foreseeable future than it has been over the last few years.

Tax revenues from property in Australia soar

One of the side effects of the recent property boom has been that tax revenues for local and state governments have increased sharply.  According to research from RP Data, during the 2009-10 financial year state and local governments raked in almost $32 billion in property taxes.

The Sydney Morning Herald reports that ‘stamp duties on conveyances were the largest single contributor to revenue at $12 billion (£7.79 million), followed by municipal rates at $11.6 billion (£7.53 billion).’

During the last financial year, revenue on stamp duties on conveyances increased by 29 per cent.  However, a slowing property market could result in reduced tax income.  RP Data researcher Tim Lawless said: “….as a result of the current soft conditions we expect that state and local governments will experience a budgetary hole at the end of this financial year due to fewer transactions.”