Powered by MOMENTUM MEDIA
subscribe to our newsletter sign up

New research points to weaker property outlook

With the price pressures arising from a housing supply deficiency now steadily being alleviated, all markets are expected to weaken or bottom out over the next two years, according to an Australian research company.

BIS Shrapnel senior manager of residential property Angie Zigomanis said investor demand has been a key driver in the upturn in both Sydney and Melbourne, but added that moves from the regulator to slow growth in bank lending to investors have seen investors retreat from their previous high levels in 2015-16.

The regulatory guidelines initiated by the Australian Prudential Regulation Authority (APRA) in 2015, he said, have resulted in tighter bank lending policy targeted at investors and have seen investor activity weaken across all states since the second half of 2015.

"In NSW and Victoria in particular, where the strength of investor demand has been a key driver of the Sydney and Melbourne residential markets respectively, the decline in investor activity has slowed the pace of price growth," he said.

Advertisement
Advertisement

As investor expectations of capital gains are reduced, investor demand is expected to weaken further, creating additional downward pressure on prices, particularly in the unit sector.

"At the same time, dwelling completions are rising to record levels and the increasing supply/demand imbalance will increasingly dampen price growth," said Mr Zigomanis.

"In particular, the boom in apartment construction over the last couple of years is creating a disconnect in the supply balance between detached houses and units, with a resulting difference in their price outlook."

The change in gears from resource investment to domestic demand driving the economy also continues to be slow and economic growth nationally is muted, he said.

"Without a substantial acceleration in economic conditions, employment and income growth will also be slow," he added.

New research points to weaker property outlook
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
Michael Jenkins - Don't the ATO need and AFSL licence to do that. Also will the ATO performing a fact find and producing a statement of advice to those funds it it.......
Blair Campbell - HHG - I had a brief discussion with someone on Facebook recently.
They insisted that payment of income tax by individuals was 'voluntary'.
I told him that.......
Paul Cunningham - You mean "as the Sydney and Melbourne property markets charge towards their longest price correction" ....
Anonymous - Where does Core Logic get its information? In the early 1990's there was a 2-3 year price correction of up to 50% in Melbourne and Sydney in the.......