Invest
How house prices will be affected under Scott Morrison
One of the nation’s top economists has revised his house price predictions in light of a Coalition victory. Here’s what his property roadmap looks like for the nation’s investors.
How house prices will be affected under Scott Morrison
One of the nation’s top economists has revised his house price predictions in light of a Coalition victory. Here’s what his property roadmap looks like for the nation’s investors.
AMP chief economist Shane Oliver said the combination of Labor’s negative gearing plans not coming into effect, a cash rate cut likely for next week, Mr Morrison’s promised financial help for first home buyers and the banking regulator relaxing its 7 per cent interest rate test points to house prices bottoming earlier and higher than previously expected.
Mr Oliver now anticipates capital city average house prices to have a top-to-bottom fall of 12 per cent – 10 per cent of which is already done – rather than 15 per cent.
Further, he expects prices to largely hit their floor at the end of the year.
A return to boom time?
However, given the still poor affordability, high debt levels, tighter lending standards and rising unemployment, a quick return to the boom time is unlikely.
Simply put: the fall has been big, and it will take a while to recover.
According to CoreLogic data, the fall in dwelling prices in capital cities are down 9.7 per cent from the highs of September 2017. With this, the total fall in value is the worst in 40 years, with Darwin (28 per cent), Sydney (15 per cent) and Melbourne (11 per cent) being the hardest hit.
How we got here
According to Mr Oliver, a range of pricing and economic factors caused the downturn:
- Firstly, a correction to the huge surge in 2017, where properties where overvalued and mortgagees were left with high debt
- The end of the mining booms in 2014 for Perth and Darwin
- Tightening lending standards that cracked down on lending to investors and interest-only loans
- A surge in supply of units in the major capitals
- 80 per cent collapse in foreign demand
- A big pool of interest-only borrowers switching to principal and interest loans
- Price fall feeding on themselves with a fear of not getting out of the market driving down the price
- Investors started to fact in the probability of Labor victory, which would restrict capital and capital gain taxes, meaning another 5 to 10 per cent could fall
Recent wins for the property market
While the drags remain significant, several positives have become apparent over the last few weeks. Mr Oliver believes these will help stabilise the market:
- First home buyers are now on the way as the government’s First Home Loan Deposit scheme takes effect.
- Secondly, APRA is lowering the 7 per cent mortgage buffer making it easier to access capital.
- The RBA governor has all but confirmed that rate cuts are on the way.
- The threat to changes to negative gearing and CGT is gone with a Morrison government victory.
The influence of unemployment
The main risk is that Australia slides into a downwards spiral as the housing downturn and global slump trigger a surge in unemployment, which by default spikes housing prices. According to Mr Oliver, ultimately, this could cause a 30 per cent plus falls in the national property prices.
AMP predicts that 60,000 jobs will be lost due to the housing downturn. However, a number of factors, including infrastructure spending, resources investment are near the bottom, non-mining investment looking strong and tax cuts for low and middle-income earners, should cap unemployment at less than 6 per cent.
RELATED ARTICLES
-
Trust, technology and triage: what NSW’s ‘name and shame’ signals for real estate governance
-
Vacancy is rising, demand is resilient: A case study in defending yield as Australia’s rental cycle rebalances
-
Don’t lose the deposit: A case study in stopping real estate payment fraud — and the ROI for doing it
About the author
About the author
Property
Trust, technology and triage: what NSW’s ‘name and shame’ signals for real estate governance
NSW’s latest enforcement action on real estate trust accounts isn’t a one-off embarrassment; it’s a stress test of sector governance. With licences suspended and penalties applied, the message is ...Read more
Property
Vacancy is rising, demand is resilient: A case study in defending yield as Australia’s rental cycle rebalances
After a blistering run, Australia’s rental market is loosening at the edges. Vacancy is edging up off historic lows, rent inflation is set to moderate into 2026, yet underlying demand remains ...Read more
Property
Don’t lose the deposit: A case study in stopping real estate payment fraud — and the ROI for doing it
Deposit redirection scams are quietly eroding buyer savings and agency reputations in Australia’s property market. This case study unpacks how a mid-tier real estate group redesigned its settlement ...Read more
Property
The $12m threshold: Why portfolio value, not property count, now defines Australia’s investor elite
The old yardstick of six properties as shorthand for investment success has been overtaken by a harsher reality: in today’s market, elite status is defined by balance-sheet strength, not asset countRead more
Property
From intuition to instrumentation: How a "two-stakeholder" sales playbook lifted close rates and cut cycle times
High-stakes consumer purchases are increasingly joint decisions. When one partner is under-served, deals stall. This case study follows an Australian real estate group that rebuilt its sales motion ...Read more
Property
Selling in 2025: How to spot bad agents fast—and build an ROI-first vendor playbook
In Australia’s property market, choosing the wrong listing agent isn’t just inconvenient—it’s a textbook principal–agent failure that can wipe tens of thousands off your sale outcomeRead more
Property
Selling in 2026: How to de‑risk your agent choice and protect tens of thousands at settlement
Choosing the wrong selling agent isn’t just an inconvenience — it’s a balance‑sheet risk. In a market where digital discovery is concentrated and AI is recasting how listings are priced and promoted, ...Read more
Property
Rate resilience in Australian housing: why scarce supply is overpowering monetary tightening
Australia’s housing market is defying higher borrowing costs because the binding constraint isn’t demand—it’s supply. Brokers report persistent buyer competition and investor repositioning, while ...Read more
Property
Trust, technology and triage: what NSW’s ‘name and shame’ signals for real estate governance
NSW’s latest enforcement action on real estate trust accounts isn’t a one-off embarrassment; it’s a stress test of sector governance. With licences suspended and penalties applied, the message is ...Read more
Property
Vacancy is rising, demand is resilient: A case study in defending yield as Australia’s rental cycle rebalances
After a blistering run, Australia’s rental market is loosening at the edges. Vacancy is edging up off historic lows, rent inflation is set to moderate into 2026, yet underlying demand remains ...Read more
Property
Don’t lose the deposit: A case study in stopping real estate payment fraud — and the ROI for doing it
Deposit redirection scams are quietly eroding buyer savings and agency reputations in Australia’s property market. This case study unpacks how a mid-tier real estate group redesigned its settlement ...Read more
Property
The $12m threshold: Why portfolio value, not property count, now defines Australia’s investor elite
The old yardstick of six properties as shorthand for investment success has been overtaken by a harsher reality: in today’s market, elite status is defined by balance-sheet strength, not asset countRead more
Property
From intuition to instrumentation: How a "two-stakeholder" sales playbook lifted close rates and cut cycle times
High-stakes consumer purchases are increasingly joint decisions. When one partner is under-served, deals stall. This case study follows an Australian real estate group that rebuilt its sales motion ...Read more
Property
Selling in 2025: How to spot bad agents fast—and build an ROI-first vendor playbook
In Australia’s property market, choosing the wrong listing agent isn’t just inconvenient—it’s a textbook principal–agent failure that can wipe tens of thousands off your sale outcomeRead more
Property
Selling in 2026: How to de‑risk your agent choice and protect tens of thousands at settlement
Choosing the wrong selling agent isn’t just an inconvenience — it’s a balance‑sheet risk. In a market where digital discovery is concentrated and AI is recasting how listings are priced and promoted, ...Read more
Property
Rate resilience in Australian housing: why scarce supply is overpowering monetary tightening
Australia’s housing market is defying higher borrowing costs because the binding constraint isn’t demand—it’s supply. Brokers report persistent buyer competition and investor repositioning, while ...Read more
