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Commercial property settlements surged higher last financial year

The volume of commercial property settlements has surged by as much as 60 per cent across the east coast of Australia, according to new data.

The latest report from PEXA Insights shows that NSW had 61 per cent growth in settled sale value and 13 per cent growth in the number of commercial sales, taking the total value of commercial property settled to $39.6 billion last financial year – higher than any other state.

Victoria recorded over 13,600 commercial sale settlements in the 21/22 financial year with a total value of commercial property settled of $34 billion a 50.3 per cent increase.

Queensland saw the highest growth in both volume (57.5 per cent) and aggregate value (108.5 per cent), with the total value of commercial property settled finishing at $24.2 billion.

Victoria has topped the nation for commercial property transactions for the past two financial years although New South Wales continues to have a higher value of settled transactions.

Source: PEXA

PEXA’s Head of Research, Mike Gill said it’s been a record period for transactions across all areas of real estate.

“Due to an extremely strong first half of the financial year, we have seen a record 12 months for residential and commercial sale settlements, both in volume and in value, across the east coast of Australia,” Mr Gills said.

Despite the strong results, there are clear signs the market has peaked, with a softer second half of the financial year having been observed, according to Mr Gill.

Commercial sale settlements were down across the board in the second half of the financial year, with New South Wales (down 17.3 per cent) and Victoria (down 14.7 per cent) seeing the largest drops in volume.

All eastern states saw declines in aggregate value of commercial sale settlements in H2, FY22, with the value of Queensland commercial transactions falling the most over the period, dropping 28.6 per cent.

Source: PEXA

The residential market also saw strong growth over the last financial year, with 628,000 residential property sale settlements completed, worth an aggregate $554 billion.

The nation’s most populous states, Queensland, New South Wales and Victoria all experienced year-on year volume growth for property sale settlements, with Queensland leading the way with 220,692 residential settlements, up almost 12 per cent from FY21. 

New South Wales posted the highest aggregate value of residential settlements of all three states for the second year in a row, recording 206,052 settlements (up 1.5 per cent year-on-year) worth $238.5 billion (up 29 per cent year-on-year).

Victoria recorded 201,361 residential property sale settlements (up 8.6 per cent year-on-year) worth more than $167 billion (up 35 per cent year-on-year).

“Queensland’s residential property market continued the strong momentum it has demonstrated over recent years recording the most sale settlements of any state in FY22, and both the New South Wales and Victorian markets have shown great buoyancy to also post record numbers in FY22,” Mr Gill said.

All three states experienced a noticeable decline in sale settlements from the first half to the second half of the financial year, coinciding with the Reserve Bank of Australia’s decision to lift the official cash rate, according to Mr Gill.

“Over recent months in particular, coinciding with rising interest rates, we have seen the residential property market slightly soften, following a period of significant growth and annual records,” he said.

Source: PEXA

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.