Apartment prices in Melbourne could fall nine percent by mid-2019, a report said.
The median house price in Sydney is expected to remain broadly flat over the next three years, after soaring 56 percent during the last four years, reported Bloomberg citing a QBE Insurance Group report.
This comes as a slew of new developments and investor lending curbs have combined to depress prices, QBE said in its annual housing outlook.
Apartment prices in Sydney are forecast to fall 6.8 percent by June 2019, as slowing price and rental growth stifle investor appetite for property.
Sydney’s housing boom has been driven by a growing population, record-low interest rates and a shortage of supply. Banks imposed stricter lending standards for property investors after regulators pushed to avert a bubble, while some state governments introduced stamp duty surcharges on foreign buyers.
“Prices are forecast to soften through the three years to 2019, which is likely to be positive for housing affordability,” said QBE Lenders’ Mortgage Insurance CEO Phil White.
“It’s expected owner-occupiers, including first home buyers, will be stepping in to pick up some of this opportunity in the market.”
QBE also expects the housing boom in Melbourne to end. The report noted that Melbourne’s median house price increased 33 percent over the last four years. By June 2019, house prices in the city could fall 0.6 percent and apartment prices by nine percent.
Over in Perth, which was significantly affected by the drop in mining investment, the median home price is expected to be 10 percent below its 2014 peak come 2019.
Bucking the trend, home prices in Brisbane are forecast to increase 6.5 percent amid a lack of new supply.
Nonetheless, there is no current sign that the housing boom is ending. Despite the lack of homes for sale, prices in Sydney rose 14 percent in the year through September, compared with the nine percent increase registered across Australia’s key cities, said CoreLogic.
According to the QBE report, fewer investors are moving into the market, after banks imposed tighter lending criteria for landlords. With this, residential loans by investors declined to 44 percent in the 12 months ended June 2016, from 51 percent during the previous year, said QBE.
Separate data by CoreLogic, however, implied that investor interest is not waning as investor lending has rebounded 10 percent since April, following a drop of 18.5 percent during the previous 12 months.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
