In the three months leading to July 2017, house prices in Sydney and Melbourne climbed 2.2 and 4.1 per cent respectively, with the number of properties bought at auctions settling in the mid-70 per cent range, according to Jonathan Mott, an analyst with UBS.
While these figures suggest a degree of resilience in the market, Mr Mott noted there had been a “moderate” slowdown already and reiterated UBS’s stance that Australia’s housing market has reached its top.
Diana Mousina, an economist at AMP Capital, shares Mr Mott’s opinion that housing price growth will slow in the coming years as “new supply flows into the market, mortgage rate hikes start to bite, affordability pressures build and sentiment towards housing turns more negative”.
This poses a risk for many Australians, as the skyrocketing housing prices have helped home owners build their wealth and given them more confidence to dip into their savings to make purchases and spend more freely, Ms Mousina said.
Ms Mousina expects national house prices will decline between 5 and 10 per cent at some point in the next two years, which will likely reduce the amount of consumer spending within the Australian economy.