Australian Property Market Outlook for the next 3 years

Australian Property Market Outlook for the next 3 years

House price growth around Australia has been slowing in recent months, led by Sydney and Melbourne, Australia’s largest and most expensive property markets. BIS suggests the current slowdown is due to tighter lending criteria, particularly a crackdown on interest-only loans, and record levels of dwelling construction being completed (above 200,000 per year).

That trend looks set to continue driven by tighter lending standards from Australia’s banking regulator – APRA at a time that our banks being allergic to risk following their belting in the Royal Banking Commission, along with weak wage growth, affordability constraints, an increase in apartment supply.

Taking inflation into account, modest price declines were forecast in most capital cities over the next 12 months.

And then all capital cities will turn around and show price growth over the next 3 years, but the results will be fragmented.

Great news is that Australian housing markets will not crash, being underpinned by record low interest rates, a “relatively stable, albeit subdued, economic environment” and strong population growth.

Population growth will absorb the huge supply of new dwellings from the recent construction boom, although any growth in rental will be minimal, according to BIS.

 

Sydney Property Market Forecast

The downturn in Sydney prices is expected to continue, predicting house prices to fall by 2 per cent over the next financial year, before they start rising again

Sydney prices are expected to rise just 3 per cent by 2021, the slowest out of every Australian capital city.

Melbourne Property Market Forecast

House prices in the Victorian capital surged 65 per cent in the last five years, reaching a peak of $892,000 in December 2017. 

Even though the Melbourne property market it is taking a breather after 5 years of exceptional growth, there is no sign of a collapse in sight.

It is expected that Record population growth continues to fuel demand for housing, maintaining an overall undersupply in the market.

While the national population grew by 1.6% in the year ended 30 June 2017, the highest growth was in Victoria, with a 2.3% increase in population and experts have predicted it is likely to surpass Sydney as the largest city of Australia by as early as 2031.

While new dwelling completions are forecast to continue to rise through 2018, as the large pipeline of apartment buildings under construction work their way to completion, supply will be largely met by population growth.

House prices are forecast to tread water through to 2021, rising below the pace of inflation.

Brisbane Property Market Forecast

BIS’s forecast is that Brisbane will see the strongest growth over the next three years, jumping 13 per cent to a median of $620,000.

An oversupply in the apartment sector is dragging down Brisbane’s wider housing market, but the sunshine state is starting to see a boost in interstate migrants — particularly from Sydney — with prospective buyers lured by Brisbane’s comparative affordability.

Brisbane real estate has been buoyed by steady population growth driving demand and underpinned by good economic fundamentals including jobs creation and a low unemployment rate.

Queensland has now become the number-one destination for internal migration, taking over from Victoria and overseas migrants are starting to see Brisbane as the place to be, bringing 12,847 residents into the city.

Canberra Property Market Forecast

Canberra’s housing market has proven to be somewhat of a quiet achiever in recent years, with momentum tipped to continue in the short term.

House prices are forecast to increase 5 per cent over the next financial year before slowing over the following two years, culminating in an overall rise of 10 per cent by 2021.

Perth Property Market Forecast

The Perth housing market has been in a slump for 4 years now.

Perth house prices have declined by 13 per cent since 2014 but the worst could be over.

It is predicted the recovery of the Perth market would be a “long, slow grind as the city has to work through a significant oversupply”

Perth is expected to see “minimal growth” for the next couple of years, before it sees “stronger growth” in 2021.

Hobart Property Market Forecast

Hobart has been the strongest property market over the last few years, but remember — it is a very small market which can be easily moved in either direction.

The median house is tipped to rise by 5 per cent over the next year, and then slow in following years.

Both houses and unit prices are forecast to grow by 8 per cent by mid-2021.

Adelaide Property Market Forecast

With South Australia’s automotive manufacturing industry shutting down, its economy and property market are currently subdued.

A soft economic environment and lacklustre population growth will result in modest house price growth over the coming years, according to BIS.

BIS predicts its shipbuilding industry will drive future employment and slowly boost interstate migration into Adelaide, lifting its median house price to $555,000 by 2021

House prices are expected to grow by 9 per cent by 2021.

Darwin Property Market Forecast

Darwin peaked in June 2014 and since then, house prices have nosedived 19 per cent, It is expected them to have bottomed out.

A general oversupply means prices are forecast to remain flat over the upcoming financial year, followed by two years of limited growth. House prices and unit prices are expected to rise by 5 per cent and 4 per cent respectively.

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