Property in Australia: Sydney and Melbourne

15 September 2016 by News Desk   |   SHARE  

Property in Australia has been booming but a slowdown could reverse the over-supply of properties.

Property in Australia has risen in prices in recent years but many cities have seen prices level out and fall.

Rising house prices have attracted property investors that have driven the supply of apartments for the past four years.

But as prices return to realistic growth levels investors may withdraw and supply of properties may dry up.

Growth of high density development has already started to fall following a market peak in 2015 and 2016. Industry observers expect prices to continue falling over the next three to five years.

The problem of under-supply could be greater in Sydney than in Melbourne.

In 2017 around 214,000 new apartments will come onto the market but as population growth falls only around 150,000 to 165,000 new properties will be needed.

There will be potential oversupply in all capital cities except Sydney and the effect could be felt as soon as 2017 and 2018.

Property in Australia: Sydney and Melbourne

In Western Australia, Perth could face the same undersupply problem but the market cycle is different in the city and the effects will not be felt for another two or three years.

Glenn Stevens, governor of the Reserve Bank of Australia admits he has ‘some discomfort’ about rising Sydney house prices.

But he says the RBA is confident there is little evidence of a widespread housing price bubble.

“Prices are rising in some areas but in other areas they’re not, and in some cities in the country, they’re falling,” he told reporters.

Australia has a new “two speed” economy, with strong growth in states such as NSW, while resource-rich states such as Western Australia and Queensland had seen growth rates slump as the mining boom had ended.

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