Expert property price predictions revealed: How will your city fare this spring?
Icy temperatures may say otherwise, but spring is finally here. And in Australia that means three things - footy finals are on the horizon, magpies are in peak swooping mode and spring property season is upon us.
Spring is traditionally the busiest season for both sellers and buyers, with the improved weather far more conducive to viewings and auctions than the winter months, therefore boosting the number of listings across the country.
So as sellers make their final renovations before going to market and buyers scramble to get their home loan finance in place, what can Australians expect when it comes to prices this spring?
Mozo property expert Steve Jovcevski has cast his eye over the state of the housing market in eight Australian capital cities and given his predictions on the ups and downs to expect in the months ahead.
Capital city breakdown
Sydney - 5% decrease
The recent retraction in Sydney house prices has been well publicised and a number of factors will contribute to the continued fall in the harbour city over the rest of the year, says Jovcevski.
“A sizeable increase in the supply of available housing, especially apartments, is contributing to falling rent in most areas of Sydney meaning that investor yields are very low. As a result, without capital growth, most investors will not be tempted to buy another property,” he said.
“Tougher lending criteria introduced by APRA and the Royal Commission are also having an indirect impact on the market with prospective buyers facing greater challenges obtaining a home loan.”
While first home buyers are likely to temper any dramatic declines in value in Sydney, Jovcevski believes a fall of around 5% should be expected with the Sydney market likely to bottom out by the end of the year.
Melbourne - 6% decrease
Similar to Sydney, Melbourne is in the midst of a property price downturn of its own with a pronounced price drop having taken place in the last quarter.
“With a sizeable first home buyer’s market and booming population growth, to date Melbourne has weathered the price correction storm better than Sydney,” said Jovcevski.
“That said, with the same stringent lending criteria applying nationwide and an 11% increase in listings from July 2017 to July 2018, it is expected that prices will finally drop by around 6%, bottoming out at the end of the year.”
Brisbane - 2% increase
“Brisbane has experienced slow growth over the last 12 months and this is expected to continue until the end of 2018, increasing by a further 2%,” said Jovcevski.
“With good interstate migration from its southern neighbours, prices in Brisbane should remain positive, so there’s unlikely to be a price correction of the kind we’ve seen in some of the other capital cities on the Eastern Seaboard.”
In saying that, Jovcevski noted that growth is likely to be constrained by stringent lending conditions which are affecting borrowers in other parts of Australia, as well as an oversupply of units in some areas of inner city Brisbane.
Perth - 1.5% increase
Perth property prices could be in store for a modest increase in the months to come, but Jovcevski warned investors that there are unlikely to be any major growth spurts for at least a couple of years.
“Perth has been in a protracted downturn for many years, linked to the end of the commodity boom, and with a slower stream of new migrants coming to the city as well as locals leaving due to limited job prospects, the housing market has spiralled downwards.”
“The market appears to have finally bottomed out with only a slight decline year on year, so Perth’s likely to see a slow resurgence of growth towards the end of 2018.”
Adelaide - 2% increase
When it comes to stability, the Adelaide market has certainly remained consistent in comparison to many of the other major capitals - a trend which Jovcevski believes is likely to continue for the time being.
“Adelaide is certainly a ‘steady as she goes’ market without the high drama and major growth and decline of the Sydney and Melbourne property market,” he said.
“I expect prices will increase by a further 2% until the end of the year as listings stay around the same number as last year, which will be welcome news for Adelaide homeowners.”
Canberra - 3.5% increase
In comparison to Sydney and Melbourne, Canberra has remained a relatively affordable market with solid price increases throughout 2018. And according to Jovcevski, homeowners in Canberra can expect the same over spring.
“Low vacancy rates and a stable demand for good rental accommodation due to transient government employees has created a perfect investors market in Canberra,” he said.
“In the next six months I expect prices to rise by 3.5% which will result in an overall solid year for the Canberra market despite the headwinds from a difficult lending environment.”
Hobart - 5% increase
The Hobart market has proved to be the standout performer amongst capital cities in Australia, with growth just below 12% in the last year. But what is the near term outlook for the Tasmanian capital?
“While price increases will continue, the heat will go out of the market by early next year,” said Jovcevski.
“Prices are expected to grow by another 5% from now until the end of the year - keeping that high year on year rate of growth. And with vacancy rates in the city under 1% and listings dropping nearly 25% over the year to July 2018, the underlying demand is still there for now.”
Darwin - 3% decrease
“Darwin is still bottoming out from the large falls seen after the end of the commodities boom,” said Jovcevski.
“And with an oversupply of units yet to work their way through the system, it is expected that prices will continue to decline until the end of 2018, but at a slower pace.”
There is a silver lining for owners in Darwin though, with Jovcevski expecting a slow and slight upwards turn in the Darwin market by mid 2019.
Think spring is the time to make your property market move? Wherever you’re looking to buy in Australia you’ll need a great home loan deal to help finance your purchase, so make sure your first move is to compare from a range of deals over at the Mozo home loan comparison hub.