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Dramatic fall in confidence in Oz real estate market

All property sectors – commercial, retail, industrial and residential, are experiencing a downward cycle with Sydney being closer to the bottom for commercial and residential property, says the Australian Property Directions Survey for April.

'The fall in sentiment over the last six months is the most dramatic fall since the survey began in 1998,' said Australian Property Institute (NSW) president Robert Hecek.

'It is predicted that the residential market in Sydney will be the first market to move forward next year, ahead of the other property classes and markets in Melbourne and Brisbane, which won't see any growth until 2011,' Hecek added.

The survey, which measures sentiment and expectations across a wide range of property industry stakeholders, including valuers, funds managers and property analysts, found that the general outlook is more pessimistic than it was six months ago. Respondents in the April survey pushed out their rebound expectations across most of the property classes by between six and 12 months.

Hecek revealed that weighing heavily on respondents' predictions was the unemployment outlook, as well as the upcoming May federal budget.

Predictions for the property trust market have also worsened since the last survey in September 2008. The survey shows that 79% of respondents see a moderate to significant adverse impact on the listed property trust market and 52% expect this impact to extend to the unlisted property trust and syndicate market.

They also expect the property recovery to lag the equity market over the next three years.

More than 70% of the respondents felt that the federal Government's stimulus package had no impact on commercial and industrial property. However, more than 80% predicted a positive influence on residential property and 76% for retail.

Hecek said the first home buyers' grant was important to the market, pointing out that since last August $3.1 billion had been written in new home loans.