Forecasts would indicate that Melbourne will move into oversupply next year because there is a bigger pipeline of apartments and more detached houses coming through. Angie Zigomanis from BIS Oxford Economics also said Brisbane was also facing the prospects of oversupply in apartments.
He points out that there are a lot of cranes on the horizon, with all those apartments being completed over the next 12 months, adding that the following 12 months’ supply was also largely locked in. But this isn’t the first time the researchers have forecasted price falls for Sydney and a moderation for Melbourne.
In a two thousand and fifteen to two thousand and eighteen report, they predicted Sydney house prices would fall 4 per cent over two thousand and sixteen and two thousand and seventeen and again in seventeen / eighteen. Also that Melbourne house prices would grow 5 per cent over two thousand fifteen / sixteen followed by a “small fall” in the following two years.
This was later revised to modest growth in the two thousand sixteen / nineteen report. Well here is the report card on all that – the latest Domain Group data shows Sydney and Melbourne house prices up 13.1 per cent and 15.2 per cent in the year to March 2017 respectively. No slowing there!
Sydney-based EPS Property Search buyers’ agent Patrick Bright said home buyers were strong on the lower north shore and he is not seeing the market dropping off in the inner ring. The activity seems to be coming from both upsizers and downsizers, as well as first-home buyers in the $1 million to $1.5 million bracket buying with parental help.
There is no doubt though that APRA measures putting a tightening on lending and increased interest rates on investors is putting downward pressure on price growth and high household debt levels, changes to foreign investment laws and a strong supply pipeline does not bode well for future price growth.
A report released last month by KPMG Economics forecast gradual declines in housing prices in Melbourne and Sydney from 2019 until 2021, largely due to reduced domestic and foreign investor demand. That report said Sydney will experience a greater adjustment than Melbourne in the next few years, but this is likely to be gradual rather than a collapse in the median dwelling price.