Office glut looms for Perth CBD
The Reserve Bank has warned Perth's commercial property market is facing a glut that will drive down rental prices across the CBD.
In its six-monthly review of the strength of the nation's financial sector, the bank said despite slowing demand there was still new office space coming on to both the Perth and Brisbane markets.
This supply, which is now out-stripping demand in Perth by its greatest level in a decade, would ultimately have an impact on rents in the city centre, it said.
"The CBD office markets in Brisbane and Perth seem most vulnerable, with the recent fall in global commodity prices likely to weigh further on tenant demand from resource-related com- panies," the report said.
The Reserve's concerns follow reports from the Real Estate Institute of WA this week that the residential housing market is facing a period of oversupply that will translate into negligible price growth through 2015.
The bank said the entire commercial property sector could be facing a period of trouble.
"The risk of a large repricing and associated market dislocation in the commercial property sector has increased," it said.
The Reserve still holds concerns about the sharp run-up in house prices, particularly in Sydney and Melbourne, though even this has been discounted to an extent by plans to force some financial institutions to tighten their lending standards.
But it has played down the rise in household debt, saying many mortgagees are more than two years ahead in their repayments.
