In some states the property market is up, while in others it’s down – if you’re confused by what’s really happening to Australian house prices, read on.
Driven by falling markets in Sydney and Melbourne, national house prices fell 0.1% in May, according to figures from property analytics group Core Logic. For the year from 31 May 2017 to 31 May 2018, prices were down 0.4% marking the first annual fall since October 2012.
But AMP Capital’s Head of Investment Strategy and Economics and Chief Economist Dr Shane Oliver says despite the falls, talk of a property market crash is overdone.
Sydney and Melbourne
Prices in Sydney fell 0.2% in May, while Melbourne prices fell 0.5%. In Sydney, the median house price is now $871,454 while in Melbourne it sits at $717,020.
And depending on whether you’re a buyer or seller in those market, there’s more good or bad news to come.
“We expect prices in Sydney and Melbourne to fall another 4% or so this year, another 5% next year and to still be falling in 2020. Overall, Sydney and Melbourne are likely to see a top-to-bottom fall of around 15% spread out to 2020,” Shane says.
But in the other capital cities, where the housing markets haven’t boomed in recent years to the same extent as Sydney or Melbourne, the forecast is different.
Perth, Darwin and Canberra
Prices in Perth and Canberra were both down 0.1% in May, while Darwin prices were down 0.2%.
However, all three markets are up for the quarter, and Shane says that prices in Perth and Darwin look to be at or close to bottoming, while Canberra is likely to see moderate price growth in the months to come.
Still the star performer, Hobart property continued its upwards surge in May, rising another 0.8%. Prices there are up 12.7% for the year from 31 May 2017 to 31 May 2018.
“The Hobart market remains very strong and the boom in Hobart is likely to continue for a while yet,” Shane says.
Brisbane and Adelaide
In Brisbane property prices rose 0.2% in May, while in Adelaide they performed even better, up 0.5%, with Shane forecasting more moderate price growth to come for both of these cities.
Regional areas v capital cities
Taken as a whole, the combined capital cities markets fell 0.2% in May, but regional locations are performing better – when combined, regional markets saw prices rise by 0.2% in May, with Geelong and Ballarat in Victoria, the Southern Highlands, Newcastle and Coffs Harbour in NSW and Queensland’s Sunshine Coast among the best performers.
“Home prices in regional centres are likely to hold up better with continuing modest growth as, generally speaking, they haven’t had the same boom as Sydney and Melbourne and so offer much better value and much higher rental yields,” Shane says.
What’s driving the property market?
Shane says that a combination of factors is behind the falling markets, including:
Shane says that interest rates are likely to remain at their current levels until 2020 but adds that with “home price weakness at levels where the Reserve Bank of Australia started cutting rates in 2008 and 2011, we can’t rule out the next move in rates being a cut rather than a hike”.
He says that unless interest rates or unemployment unexpectedly skyrocket talk of a property market crash has been overdone.
Source: AMP News & Insights