Orchid11,Not really sure what you are comparing because you...

Orchid11,
Not really sure what you are comparing because you started off talking about index performance over the 2009 financial year and then went on to quote index performance over the 2009 calendar year? FY2009 performances were far worse for all sectors.

Probably more beneficial to look at the performance of the index's on a percentage basis too rather than the actual point movements which aren't really compareable in the context presented.

As far as "logical reasons" a very valid one that the market takes into perspective is the value of writedowns incurred for FY2009 and the very real likelyhood of further writedowns still to be accounted for in FY2010. Those writedowns should ease this FY but nevertherless they have a devastating impact on EPS even though they are temporary accounting adjustments required by current accounting standards. Plenty of other reasons ofcourse like slow property sales outside of the residential sector, less borrowing/gearing meaning less future profit, almost a uniform halt on new developments (hence less cashflow/profit for the future) etc. are all weighing on the sector.

Nevertheless, picking the right stocks now will deliver good returns for the patient though

Re. your statement "the fact that the property market in Australia did not lose much value in comparison with the rest of the world during the GFC!" is not totally correct because I believe you are only taking into consideration the residential markets and not the overall market which saw the commercial segment suffer substantial loss of property value - and hence, the huge writedowns!

Three cheers for your last statement- I hope so too, although now the sector has to contend with rising interest rates which are (usually)a bit of a sentiment dampener to the sector!