2018 has seen the beginning of the downturn for Aussie housing demand and prices. While many may be rushing to put their house on the market before it bottoms out, auction clearance rates around Australia have dropped well below the 50% mark.
The Banking Royal Commission findings have seen banks react by tightening lending regulations. And according to AAP, the housing market slowdown will continue in Sydney and Melbourne, but growth is expected in Brisbane and Adelaide.
Pullback expected for Sydney and Melbourne
The two largest property markets in Australia — Sydney and Melbourne — are predicted to fall by 1.2% and 2.5% by June 2021, respectively.
QBE Insurance released data on Thursday, forecasting a fall in the price of units. They expect a 2.1% fall for Melbourne and 3.1% fall in Sydney.
Unfortunately for homeowners trying to get into the market in Australia’s other capital cities, especially Adelaide and Brisbane, house values are expected to increase by 12.4% and 11.3%, respectively.
Apartment owners will be hit the hardest
Phil White, QBE Lenders’ Mortgage Insurance chief executive, forecasts a large slump for apartment owners, as increased supply and weaker demand for units continues.
According to AAP, Mr White said:
‘We anticipate foreign investment will further dampen in coming years owing to a number of factors such as increased approval fees, stamp duty and land tax surcharges…
‘As well as tighter capital controls from foreign governments, most notably China, which have impacted how much money they can take out of their country.’
He believes that high overseas migration and population growth means that housing market drops will be limited.
While Sydney and Melbourne saw massive growth between 2012 and 2017, these markets are now coming back down to Earth.
Sydney saw an increase by 84% during this time. It has now fallen by 7.6% in 2018.
According to the report, they predict a fall of 4.2% in 2019, and for them to bottom out in 2020.
But 2021 sees the market rising by 2.3%, according to data.
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