The slowing down of Australia real estate market has been evident since the start of 2018 until mid-year. Prices of properties have been on slow decline, especially Melbourne and Sydney, which are the most expensive cities to purchase a property from in the country.
This decline was caused mainly by the following:
- stricter lending conditions set by the Australian Prudential Regulation Authority (APRA)
- increase in interest rates, especially for foreign borrowers
- increase in apartment supply, especially in Central Business Districts (with a record of 200,000 dwelling finished per year all over the country)
BIS Oxford Economics recently released their property forecast for the next three years. BIS experts say this is part of the property market cycle — the stage wherein growth becomes slower and the value of properties begin to fall in some areas. This decline is expected until the middle of 2019. However, prices are expected to even out on the second half of 2019 and improve again until 2021. This means the housing market won’t crash, but is expected to even out with the help of population growth and influx of immigrants.
Australia Real Estate Market Forecast per Region
Australian Capital Territory: Canberra Real Estate Market Forecast for 2018 to 2021
The median house price for June 2018 is $700,000. It is predicted to increase to $770,000 in the middle of 2021. The past has shown Canberra real estate to be on good standing, and this is expected to continue for the next fiscal year, where it is estimated to grow 5%. The growth will continue albeit at a slower pace, until it reaches 10% growth in 2021.
Western Australia: Perth Real Estate Market Forecast for 2018 to 2021
The median property price in Perth for June 2018 is $520,000. BIS estimates it to grow to $570,000 in June of 2021. The housing market in Western Australia has fallen and has seen a sad turn the past four years. However, BIS expects that the worst is over for this state. With foreign and interstate migration, Perth will be able to move up slowly. A 10% increase in the next three years might be underway.
South Australia: Adelaide Real Estate Market Forecast for 2018 to 2021
The current median price of houses in Adelaide is $510,000, which is expected to increase to $555,000 in June of 2021. At the moment, the real estate market in South Australia is affected by the automotive manufacturing shutdown in its stat capital. The population growth in the area is also small, which makes investors wary of buying. However, the shipbuilding industry will likely improve employment rates in the area, which may cause influx of movers from other states. This can be the main driver of property price increase of 9% in the next three years.
Tasmania: Hobart Real Estate Market Forecast for 2018 to 2021
Tasmania‘s capital city Hobart currently has a median residential property price of $485,000. This state capital actually had the strongest real estate growth the past few years as compared to the rest of Australia. People moving in to Hobart are comprised of young adults and expats thinking of taking roots and growing their families. However, being a small property market, the changes in Hobart real estate can move in any direction. Still, an 8% growth from 2018 to 2021 is expected.
Queensland: Brisbane Real Estate Market Forecast for 2018 to 2021
Brisbane seems to be the one expected to see huge growth in the next three years, growing at 13% from today. Currently, the median price of house is $550,000; so it is expected to rise to $620,000 by June of 2021. Because the cost of living in Brisbane is more affordable than Sydney, we may see a surge of movers from New South Wales’ capital to Queensland‘s capital city. Brisbane is now becoming the “place to be” because of its good economic growth and low rate of unemployment.
Victoria: Melbourne Real Estate Market Forecast for 2018 to 2021
Victoria‘s state capital is part of the bottom three when it comes real estate market growth in the next few years. From its current median housing price of $870,000, it might only move up to $920,000 by June 2021, or only 6%. Investors would be happy to know that it is not likely to collapse, though. After all, Melbourne has seen exceptional growth the past five years, surging up to 65% from the last five years. CBD apartments under construction are about to be completed, evening out the demand against the supply.
New South Wales: Sydney Real Estate Market Forecast for 2018 to 2021
Sydney real estate is expected to see the lowest growth rate of all, with only 3% from 2018 to 2021. Sydney’s median price for real estate is at $1.12 million, so it is predicted to increase to $1.15 three years from now. The price of real estate in Sydney is currently on a decline, and this is expected to continue until 2019; after which, it is expected to rise again for the next two years.
Local and foreign investors alike pushed Sydney’s real estate market up by 85% since 2013. However, with the new lending restrictions enforced against foreign buyers, particularly Chinese investors, the property market reached stagnation and eventual decline.
Experts believe that price correction and improved economic situation will eventual help the property market in New South Wales achieve a slight increase come 2021.
Northern Territory: Darwin Real Estate Market Forecast for 2018 to 2021
Northern Territory‘s state capital is at the bottom two of the estimated property value improvement, at a rate of 5%. Currently at $505,000, the median house price in the middle of 2021 is expected to be at $520,000. BIS experts believe that Darwin’s property market has already bottomed out. The prices are expected to stabilize, and eventually climb up, albeit in a very limited manner, in the next few years.
These predictions may help you decide on which place to buy, if you are thinking of diving in to Australia real estate market. However, hiring a property investment strategist that has no connection with real estate properties (does not buy or sell properties) can greatly help you. Sometimes these predictions can actually influence the changes in real estate market trends, may it be positive or negative. Make sure to have reliable advisers before proceeding with your investment.