Leading Oxford Economics is predicting that house prices throughout Australia will continue to be flat over 2018-2019, with some markets poised to decline. This is the same prediction from other economic heavyweights.
The new report, Residential Property Prospects 2018 to 2021, found that the residential market is being weighed down by the crunch on investor lending, combined with increasing levels of new housing stock.
With the exception of Hobart, each major residential market had posted a downturn in price growth during 2017-2018, including Melbourne, Sydney and even Newcastle.
However, according to the report’s author, low interest rates and a fairly steady, though restrained economic situation, was mitigating the prospect of a significant price correction.
An apartment glut is also expected to occur in most capital cities but especially in Newcastle, where investors had in the past pushed the construction market to record levels, according to BIS Oxford Economics.
June median house price: $1.12 million
The report is forecasting the price drop in Sydney to continue, with prices declining by 2% in 2018-2019.
Prices could moderately increase in 2020-2021 due to a price correction, coupled with undersupply and some strengthening of the economic outlook. However, the median house price is expected to remain beneath the June 2017 peak through 2021.
Given the declining investor demand, the report affirmed that first-home buyer activity was aiding unit prices. Still, median prices for apartments were expected to decline 4% in 2017-2018 and further 3% in 2018-2019.
June median house price: $870,000
Demand for housing, where there is an undersupply in the market, continues to be driven by record population growth.
New housing completions are expected to steadily increase through 2018, as the major pipeline of apartment buildings being constructed are close to being completed, and supply will be mostly met by population growth.
House prices are expected to tread water over the next three years, increasing below the level of inflation. According to the report, the incipient slowdown in new housing construction could trigger a moderate increase in prices.
Though the wider market is not forecast to slip into a glut, BIS Oxford Economics expects the emergence of pockets of apartment glut in view of the scope of new unit construction in comparison to houses. Unit prices are expected to drop 2% through 2021.
June median house price: $700,000
Canberra’s residential market is expected to continue to be a quiet achiever as it has been in recent years.
House prices are predicted to grow 5% through 2018-2019 before decelerating through 2021, ending in total increase of 10% by 2021. Apartments were expected to pose a price increase of 6% through 2021.
A boom in construction in Canberra is forecast to diminish the upward pressure on housing prices.
The reported stated that the rental market in Canberra was extremely stretched, with a 0.7% vacancy rate during the March quarter.
June media house price: $550,000
The sunshine state’s broader housing market, which is expected to post moderate price increases through 2020, is being dragged down by a glut in the apartment.
However, there has been an increase in interstate migration, with Sydney residents relocating to Brisbane.
A downturn in construction, combined with an increase in population, will drive median house price by a forecasted 13%, or $70,000, over the next three years.
June median house price: $520,000
House prices in Perth have dropped by 13% since 2014, but the worst of the housing downturn could be done already. House prices seemed to be bottoming out, as evidenced by greater foreign migration and a decline in the number of West Australians relocating interstate.
Vacancy rate is still high at 5.1% and rents have subsided, dropping by as much as 30% since 2013.
According to the report, the upturn of Perth’s market is expected to be a prolonged, gradual movement as the city has to contend with a major glut.
House prices are forecast to keep pace with inflation through 2021, increasing by roughly 10%, while unit price are predicted to increase by only 5%.
June median house price: $485,000
Hobart has eluded the countrywide trend and posted strong house price increases in recent years. Interstate migration has caused this, with most of the population growth having occurred in Hobart.
But the present flow of migration comprises mostly of younger adults and families with kids, signifying that people are moving due to the affordability in Hobart, or expats returning to raise a family.
The median house price is expected to increase by 5% in 2019, and then relax through 2021. The price for both houses and units are expected to increase by 8% by mid-2021.
June median house price: $510,000
House prices will see modest growth in the coming years due to a weak economic environment and dull population growth.
South Australia’s economic environment is forecast to remain muted in the short term, given the high unemployment rate and the closure of automotive production. Buyers are likely to be more wary.
A 9% increase is projected for house prices by 2021.
June median house price: $505,000
House prices in Darwin have plunged by nearly 20% since 2014. However, the report has predicted prices to have reached its lowest level.
Thanks to a general glut, prices are expected to continue to be flat through the 2018-2019, followed by limited growth over the next two years.
House prices are projected to grow by 5% and unit prices by 4%.
Statistics are difficult to find and report on for the Newcastle Region as a whole, however if you wish to know how your suburb has been performing and what may be predicted for the next two years, then ask Annette Pinkerton. Call her today on 0418447856.