But prices across different states may still diverge, study says
House values across Australia are expected to significantly diverge throughout the rest of the decade, according to the CoreLogic-Moody’s Analytics Australian Home Value Index Forecast.
House prices in Sydney, and some parts of Melbourne, will drop, while those in the rest of the country, including Adelaide, Brisbane, Canberra, and Hobart will continue to rise at a slower pace.
“Dwelling values in Australia are seeing slower growth or outright decline as a result of past value increases, which have exceeded income and rental growth, past supply increases, and actual or expected increases in borrowing costs,” Moody’s Analytics housing economist Alaistair Chan said in a statement.
Chan sees the worst is over. According to him, dwelling values beginning next year will strengthen amid less housing supply and income and rental growth supported by the Australian economy.
“While most recent housing market downturns have been driven by external shocks or higher interest rates, the current downturn is being driven by tighter lending policies, particularly for investors, which are impacting the most expensive and most investor-centric housing markets,” CoreLogic research director Tim Lawless said.
House values forecasts
House values in Sydney will experience a nearly 5% decline in 2018 before recovering in 2019. Thanks in part to good demand, apartment values in Sydney will likely keep their value and gain a .6% in 2018. House values in Melbourne are projected to see a 1.5% increase in 2018, albeit some declines are for inner Melbourne. Melbourne’s apartment market is expected to remain strong and gain 4.3% in 2018.
House values across Brisbane are predicted to gain 1.4% in 2018, with strength in West and Inner Brisbane and slumping in South Brisbane. The city’s apartment values are expected to rise by .8% this year, thanks to the recovery in East Brisbane apartment values. However, inner Brisbane apartments will likely see mild declines.
Perth’s economy is recovering steadily. House values in the city are tipped to see a .5% decline this year before a 2.2% recovery in 2019. Adelaide’s housing market will continue to grow. House values in Adelaide will experience a 1.2% boost in 2018, after a 4.9% growth in 2017. Canberra’s housing market is projected to rise 4% in 2018 after an 8.7% growth in 2017.
