Invest
Oversupply predicted to fuel 20% property declines
Sydney and Melbourne could experience a drop of up to 20 per cent in property prices in some areas as early as next year, given the supply of apartments coming on stream, an Australian economist has predicted.
Oversupply predicted to fuel 20% property declines
Sydney and Melbourne could experience a drop of up to 20 per cent in property prices in some areas as early as next year, given the supply of apartments coming on stream, an Australian economist has predicted.
AMP chief economist Shane Oliver says prices in Australia’s hottest property markets are likely headed for citywide falls.
“My base case would be at some point in the next couple of years, prices will fall 5 to 10 per cent in Sydney and Melbourne,” Mr Oliver told Nest Egg.
“It probably requires a turn-up in the RBA’s interest rate cycle. I don’t think the banks are enough to do that on their own.”
However, with a steady supply of apartments still coming on stream in specific areas across the two cities, the price pain should be more acute in some suburbs than others.
Mr Oliver said apartment-saturated suburbs could see declines of up to 20 per cent.
“I think sharp falls of 15 to 20 per cent could be more constrained to suburbs with lots of cranes, and more constrained to apartments as opposed to houses. In Melbourne, that apartment supply seems to be more concentrated to the inner city, whereas in Sydney it’s in those satellite centres like Chatswood and Parramatta,” he said.
“But if you're looking at standalone houses in the eastern suburbs of Sydney or the most of the suburbs of Melbourne, or out at Campbelltown and the Hills district, you’re probably looking at price declines, when they start to kick in at the start of next year, contained around 5 per cent.”
While Melbourne remains more at risk given its burgeoning apartment oversupply, those price declines could be followed by stabilisation if both cities act on housing affordability, Mr Oliver said.
“If state governments are serious about improving the affordability issue, and particularly expanding supply on a fundamental basis, that should help keep house prices down in the years ahead which should in turn gradually help improve affordability.”
RELATED ARTICLES
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more
