Australian house, apartment markets to moderate in 2016-17
South-east Queensland is predicted to be the standout performer in Australian property, with its markets forecast to increase rates of growth over 2016-17.
Australia’s house and apartment markets are beginning to stabilise, although most capital cities are still showing growth.
That view is backed up by analysis from Jones Lang LaSalle (JLL), which shows a broad slowdown in growth, but with some upside for south-east Queensland. JLL’s analysis for the year to April 2016 reveals the state of the major capital city housing and apartment markets:
- Sydney: house price growth in Australia’s biggest market has eased after three strong years, with the median house price at $805,000, having grown 7.5% year-on-year. Apartment price growth has been slower, at 7.3% year-on-year.
- Melbourne: median house price was $610,000, having grown 10.7% year-on-year, while median prices for apartments was $469,000, with growth of 2.5% over the 12-month period. Auction clearance rates dropped to 70.3%, down from 80% over the year.
- Brisbane: median prices were $495,200 for houses and $398,000 for apartments. Price growth for houses was 4.9% year-on-year, but just 0.5% for apartments. However, Brisbane listings are on the rise, with total listings for the year up 3.8% and new listings up 10.8%. Brisbane auction clearance rates have also increased marginally to 46.5% on a higher number of auctions.
- Adelaide: median house prices were $443,500, with growth of 3.3% year-on-year. Median apartment prices were $340,000, up 2% over 12 months. Listings in Adelaide are on the rise, with house listings up 7.9% and apartments up 11%.
- Canberra: house prices in this market increased only marginally over 12 months, rising just 1.9% to a median of $597,500, while apartment prices fell by 0.9% to $415,000. House listings for the year increased by only 0.8%, while new listings declined by 9.4%. The number of apartments listed declined, with total listings down 2.9% and new listings down 8.6%.
- Perth: continuing to suffer from the downturn in the mining industry, Perth dwelling prices have declined. Median house prices were $510,000, a fall of 2% year-on-year, while apartments were $420,000, a drop of 1.9%. Sales listings for the year were up substantially, with house listings increasing by 19.1% and new listings up 0.9%, while apartment listings increased by 11.4%, although new listings declined by 8.9%.
Many investors are speculating about the chances of a property market crash, but this is only likely if interest rates increase dramatically, Australia plunges into economic recession, or massive oversupply is suddenly introduced. A combination of all three of these is highly unlikely.
Economists and analysts seem to agree the rate of growth in our biggest housing markets, Melbourne and Sydney, will slow in the short to medium term, to between 5% and 7%.
South-east Queensland appears set to be the stand-out performer for the foreseeable future, with the Golden Triangle of Brisbane, the Gold Coast and Sunshine Coast house markets expected to increase their rate of growth over 2016-17.
The forecast for Perth and Darwin markets is gloomy, however – these cities have been hit by the slowdown in the mining industry, which is expected to limit growth in the near term.
In this environment, investors can afford to wait for better opportunities to present themselves. As AMP Capital’s Head of Investment Strategy and Chief Economist, Shane Oliver, points out: “There’s no incentive to rush out and buy now, particularly in Sydney and Melbourne, as their property markets are likely to cool. In Perth and other cities, it’s probably best to hold off on buying property for now as prices face more downside.”
Are you planning a home move? What is the market like in your area?