Prospects for capital city housing markets in 2017 are mixed with Sydney and Melbourne continuing to shoot ahead while activity in the other capitals remains “relatively benign,” says one leading economist
In an article on Domain
, the site’s group chief economist Andrew Wilson said that while the two largest capitals will “lead the pack” the rest will be held back by low growth, low income economies.
Lower interest rates next year will likely bolster the housing markets with Wilson predicting further cuts from the Reserve Bank to stimulate the ailing economy.
However, the affordability crisis will rely on the banks passing on any official rate reductions if they occur, he said.
“House price growth, although remaining positive in most capitals through 2017, will likely track in a narrow range of up to 5% annually for the top performers.”
Both Darwin and Perth are set to bottom out next year, he added, after an extended period with prices at their lowest point in three years. Whether Perth can again resume sustained growth depended on whether the local economy stabilised and then improved, Wilson said.
Domain made the following predictions for capital city house price growth in 2017:
- Sydney (4%)
- Melbourne (5%)
- Brisbane (4%)
- Adelaide (3%)
- Perth (0%)
- Hobart (2%)
- Darwin (1%)
- Canberra (5%)
The number of new apartments being built will continue to affect the unit market, pushing supply ahead of demand throughout the coming year. This will have a number of different effects in local markets.
“The Sydney market remains chronically undersupplied with solid demand continuing to put a floor under unit prices,” Wilson said.
“Record new apartment supply in the Melbourne CBD will continue to outstrip demand with downward pressure on prices to continue in that sub-market.”
However, strong demand in suburban Melbourne will offset the weaker CBD market ensuring that overall growth in the Melbourne unit market remains positive in 2017.
While unit prices in Brisbane, Perth and Darwin are expected to continue their downward slide, price increases in both Adelaide and Canberra will positive but modest, Wilson said.
Domain made the following capital city unit growth predictions for 2017:
FHBs increasingly locked out of property
Perth real estate “bouncing on the bottom”
Annual property price growth weakest since 2013
- Sydney (3%)
- Melbourne (3%)
- Brisbane (-4%)
- Adelaide (2%)
- Perth (-3%)
- Hobart (2%)
- Darwin (-2%)
- Canberra (3%)