TALK is rife that the Australian property market is poised to slow down and prices are set to slump, attributed to an ongoing market correction in Perth and Darwin, and the APRA actions of restricting credit growth.
As usual, this has sparked a debate among the experts. Some say that Australia’s housing price boom has hit its peak, and there could be an impending recession. Other industry insiders say that a price correction is part of the cycle. Macquarie predicted a dip in house prices of as much as 7.5% by March 2016 – a figure that some experts have dismissed.
Naturally, this has sparked concern among investors and home buyers on how major Australian cities like Melbourne, Sydney and Perth will be affected.
Louis Christopher, managing director of independent property research company SQM Research, forecasts that the national housing market will slow down in 2016 predominantly as a result of a slowing Sydney housing market, but that the market will not record a fall in prices for the year.
Perth and Darwin are reported to experience the largest falls in rents, but this is just part of an ongoing trend currently being recorded in the two cities, says Christopher.
All said and done, there’s no need for hysterics or dramatics. “I don’t think there is any immediate danger of a significant fall in house prices – 7.5% is remarkably precise and you’re brave to be that precise in forecasts about the housing market,” says Saul Eslake, a leading Australian economist, arguing that even though house prices might be overvalued, did not mean they’d fall in the same way as stocks.
Melbourne to Outshine Sydney!
It certainly isn’t all doom and gloom. In spite of the bleak news, SQM’s 2016 Housing Boom and Bust Report forecasts that average capital city dwelling prices will rise between 3% and 7% next year (the last 12 months up to June 2015 posted a 9.8% rise).
So, yes, the fact is that there has been a moderation in Australia’s housing market, but this is normal and part of the cycle that affects housing markets all over the world. Corrections are to be expected in markets that have boomed in recent years as part and parcel of rebalancing, i.e, markets which have experienced the most robust price growth and where conditions have been imbalanced.
Additionally, Melbourne is set to outshine Sydney on property price growth, with a rise in Melbourne residences predicted to between 8% and 13%. Rents in Hobart and Gold Coast are also set to increase.
And while Sydney has been in the media for its huge rate of capital growth, Melbourne has experienced five years of 15% plus annual growth since the year 2000.
Melbourne : The Figures Don’t Lie
Having been ranked the World’s Most Liveable City for the 5th year, Melbourne is an interesting city to watch as the numbers and fundamentals seem to be in its favour. Let’s consider the facts:
- With 100,000 people migrating to Melbourne each year, Australia Bureau of Statistics projections has Melbourne overtaking Sydney as Australia’s biggest city in 2056.
- The current population of 4.35 million is anticipated to reach 7.7 million.
- With an average of 2.6 people per household, 38,000 properties are needed per year to accommodate that growth.
- In 2014 Melbourne’s recorded median housing price of A$630,000 registered more than a 16% annual growth figure, after negative growth of nearly 5% during the 2012 downturn.
- To learn more about the growth boom in Melbourne, watch this special news documentary by 7 News. Hover and click on the link to watch the videos.
#DidYouKnow that 63% of Malaysians choose to migrate to Melbourne?
In conclusion, the facts speak for themselves. The threat of a massive oversupply in Melbourne may well be overstated, say some experts, given the fall of vacancy rates as population growth and housing formation have quickly absorbed new housing stock being completed.
There are still many affordable properties available in the inner north and south of the city. Melbourne’s most affordable 1-bedroom apartments are located in Carlton, Carnegie in the southeast, Elwood and St Kilda. Whilst in the city’s west, there is Footscray and Maribyrnong. In some parts of Melbourne, it is still possible to purchase a bungalow near a train station for $400K! While stocks last, of course 🙂
Ultimately, in the face of Melbourne’s impressive consistent capital growth patterns, it is wise to remember that it are certain suburbs, property types and varying categories of buyers that are driving this growth.
- Melbourne Looks Set to Outshine Sydney on the Property Ladder
- Real Estate Industry Insiders Say Property Prices Look Set to Fall
- The Melbourne Market Will Continue to Perform for Investors This Year & Beyond if You know Where to Buy
- Maribyrnong the Next Melbourne Property Hotspot
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