Australia’s property market has experienced a sped-up growth over the past 5 years. However, it’s moving into the next property cycle phase and slowing down. Some of its largest markets such as Sydney and Melbourne are experiencing slower growth compared to economic conditions.
However, because of Australia’s stable economy, constant population growth and low-interest rates, analysts predict that major cities will bounce back over the next 3 years.
We’ve put together a brief including forecasts of the housing market in the main cities in Australia and the main drivers leading the price trends.
The average house price in Sydney as of June 2018 was $1.14 mil. And there’s no positive outlook for 2019, so investors are focusing on stabilizing and maximizing the current market opportunities. The forecasted average house price for 2019 is 1,12 mil.
Depreciation will gradually slow down and median property prices will increase by the end of 2019. SQM Research shows that in 2019 Sydney will face a decline of around -9% in a worst-case scenario. But the decline could reach only -3% if banks adjust interest rate levels.
BIS Oxford Economics (industry analyst) forecasts that average property prices will grow by 2% considering the market’s under-supply, improving economic conditions and price corrections. But, because of consistent job creation and active migration, the city’s population is growing and combined with a stable economy, the demand for property will rise by 2021.
The average house price in Brisbane as of June 2018 was $550,000. The median price in 2019 will reach around $575,000. The property market will grow by 13% during 2018-2021.
Thanks to the continuous increase of the population in Brisbane, there’s no oversupply of housing properties. The Boom and Bust 2019 report published by SQM Research shows that Brisbane will show lower volatility than other cities in Australia in 2019. The report includes 4 scenarios which outline a growth of between -2% to +5%.
Having welcomed over 13,000 migrants from overseas, Brisbane is an attractive destination for investors. Other driving factors include a favourable economy, low unemployment rates and a constant growth of job available.
Melbourne’s property market will grow by 6% during the next 3 years. The average house price as of June 2018 was $870,000, and the forecasted price for 2021 stands at around $920,000. Melbourne is showing stable economic conditions, increased population growth and strong demand for housing. Because of the rapid increase in the population, Melbourne will exceed Sydney and become the largest city in Australia. It’s maintaining a constant under-supply in the property market. The ring suburbs of Melbourne have become appealing to investors and average property prices reach around $1 mil.
Canberra & Perth
Canberra’s property market will show a 5% growth in 2019 and average house prices will reach around $740,000. Despite other cities’ property market evolution, SQM Research forecasts a growth of between 2%-5% for Canberra.
Today, Perth’s property market is at an all-time low. Prices have dropped by around 13% over the past 4 years. But the market is slowly reverting, and the high interstate and overseas migration flow will meet the housing oversupply. Analysts predict a strengthening of Perth’s property market by 2021.
Investing in Australia’s Residential Market
According to the National Bank of Australia, foreigners bought about 8.1% of new homes and 4.1% of existing houses during the September quarter of 2018. As a foreigner, if you’re considering investing in Australia’s property market you should make sure you’re holding the right visa that qualifies for a home loan. To avoid any difficulties, your best approach is to get a registered migration agent to help you.
The general sentiment about Australia’s property market involves a slow decrease in value for 2019. Despite the sped-up growth encountered over the past years, the housing market has reached a stagnation phase and more and more people are trying their luck and buying prize home tickets. High-interest rates, stricter lending conditions, and international economic tensions have slowed down the market. However, the increased influx of interstate and overseas migration combined with a strengthening of the economy will lead to the property reverting by 2021.