Experts Predict House Price Growth Will Slow in Australia



There has been a lot of speculation that property prices in Australia could crash but economists see the situation rather differently. Instead of a crash they predict price growth will slow down before prices stall rather than crashing after they have reached a peak sometime during the next couple of years.

In spite of mortgage rates remaining low over the next year, lenders are likely to become more cautious and could make it tougher for buyers to get a loan. For the past three years there have been strong price growth increases in Melbourne and Sydney and experts expect this to continue but anticipate that price growth should slow down over the next year, especially as the supply of housing continues to be high.

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In addition, there are indications that high prices in the cities are pushing home buyers to consider areas further afield. As a result there have been signs of growth in other markets throughout the country, particularly in those adjacent to Sydney such as Newcastle and Wollongong, as well as certain areas around the Gold and Sunshine Coast and in Brisbane.

Experts believe markets in Canberra, Hobart and Adelaide are likely to be contained but that weakness will set in in Darwin and Perth as investment to these areas begins to fade away. All in all, it’s expected that prices will continue to rise throughout this year and next year before beginning to fall in 2017.

According to the article in news.com.au, predictions that the residential real estate market will crash are likely to be exaggerated. Even though residential real estate markets are being forecast to begin weakening from 2016 to 2017 due to a combination of an increase in housing supply and the likelihood of tightening in lending conditions, it’s expected that any downturn will be similar to that seen in 2011 and 2012.

An increase in home building has adjusted the balance between supply and demand. In 2008 to 2009, rental growth was in the mid-to high single digits but is now decreased to just 2%. The increase in housing supply has reduced rental returns for investors and it’s also expected that investors demand for new homes could be subdued due to more stringent lending conditions which aim to target investors rather than homebuyers. This could reduce the demand for multiunit properties which currently form a big part of the market.

Even though experts are not forecasting a collapse in the housing market, they do think it’s possible that housing construction activity could fall sharply from the middle of next year onwards.

Allison Halliday About Allison Halliday

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.

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