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News: Jobs growth dip threatens residential

Slowing levels of employment growth in Australia's eastern coastal capital cities could further hit residential property values this year, according to one of Australia's biggest property developers.

Australand managing director Brendan Crotty told The Australian today that the Sydney and Brisbane property markets were most susceptible to a softening in employment growth.

"Until you see employment starting to improve again you won't see Sydney residential improve," Mr Crotty said.

After allowing for reporting changes required by the new Australian international financial reporting standards Australand's profit remained almost unchanged from last year's result.

The group would continue its withdrawal from the apartment market, which was a "break-even business" in the current environment, Mr Crotty said.  He went on to say that Australand would cut their investment in apartment development to $300 million, reducing income from apartments to just 20 per cent of revenue.

"We made a very large amount of money from apartments from 2000 to 2003, but basically in the short term there just doesn't seem to be any prospect of it being a very profitable sector," Mr Crotty said. "If it was a highly profitable business we would not be reducing our exposure to it."

Mr Crotty said affordability remained a problem in Sydney and southeast Queensland, with Melbourne expected to outperform those cities this calendar year.  He said the Brisbane residential market was "softening" while the Sydney market remained flat.

By contrast, the "booming" West Australian residential property market had underpinned the group's result, with 30 per cent of all residential sales originating in that state.

Mr Crotty said industrial and commercial markets were "improving" in Sydney, "strong" in Melbourne and "booming" in Brisbane.

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