Where are the Property Prices Heading?

Written by Posted On Sunday, 03 December 2017 23:52

 

The Australian property market is slowing down, and data released by the Australian Bureau of Statistics (ABS) has reported that Melbourne’s apartment market has taken its toll with prices now starting to fall. Evidently, Melbourne, the epicentre of the property boom in Australia, will be seeing a fall in apartment prices because of an oversupply. Contrary to that, some reports are saying otherwise.

So, the real question is, “Where is the Melbourne Property prices leading to? Will there be a rise or fall?”

Let’s see what experts and reports have to say about it.

What do predictions say?

The growth of property prices in Melbourne has been among the strongest in Australia. In July 2016, Melbourne saw the prices of homes lifting by 1.4% and recorded the highest auction clearance rate, at 73.9%, which was up from 71.8 % at the same time last year.  Melbourne’s property market has been so far supported by its strong population growth and a strong economy creating around 72,786 jobs and the strong auction clearance rates show the underlying strength of the local market.

Corelogic states that this growth will be boosted in the second half of 2017 as the first home buyers’ grant works its way through the market, creating an established home owners boost as the raft of new home buyers enter the market buying up established apartments.

Melbourne’s established housing stock currently sits at 4.2 months of supply for the city. Although the supply levels still remain quite low, yet they are at their highest for this time of year as compared to the last five years.

Another prediction by Dr Oliver, Mr Koukoulas and BIS Oxford Economics managing director Robert Mellor stated that the expected unit prices in Melbourne would decline. If the predictions do come true then we will be seeing Melbourne’s current median apartment price of $474,848 dropping to anywhere between $451,106 and $465,351 by June 2018.

Here is a look at the predictions of how prices in melbourne will change in the next 12 months.

For Melbourne homes

Experts

Forecast

Median at June 2018

Change from current median (In AUD)

Shane Oliver

+2%

$883,026

$17,314

Andrew Wilson

+8%

$934,969

$69,257

Robert Mellor

+3%

$891,683

$25,971

Hans Kunnen

+5% to 10%

$930,640*

$64,928

Stephen Koukoulas

0% (Flat)

$865,712

$0

*Mid-range forecast chosen (7.5% houses, 2.5% units) to anticipate median price.

For Melbourne units

Experts

Forecast

Median at June 2018

Change from current median (In AUD)

Shane Oliver

+5%

$451,106

-$23,742

Andrew Wilson

+3%

$489,093

$14,245

Robert Mellor

-2%

$465,351

-$9497

Hans Kunnen

+0% to 5%

$486,719*

$11,871

Stephen Koukoulas

-4%

$455,854

-$18,994

*Mid-range forecast chosen (7.5% houses, 2.5% units) to anticipate median price.

Conclusion

While the slide in property prices in Melbourne will last for three years, it will be relatively gentle and will not erase the gains from this year. The predicted drivers of the fall will be rising mortgage interest rates and dampened demand due to increased housing supply. It is always good to talk to a Mortgage Broker in Melbourne to understand how this decline may impact you in 2018. The Melbourne market is yet to react to a predicted rise in the supply of detached houses, but change is evident nonetheless.

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Aman Singh

Aman is the CEO/ Founder at Credit Hub with over 17 Years’ experience in Finance and Management. He has exceptional leadership skills, providing a workplace that stimulates advanced thinking. He is an innovator when it comes to making new improvements in the current process.

https://credithub.com.au

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