“In the eastern suburbs, values have risen faster than incomes consistently since 2013. As income growth and house values converge at a similar pace, a slowdown in houses and apartments is expected,” Moody’s Analytics economist Katrina Ell said.
Apartment prices in the region of Baulkham Hills and Hawkesbury are forecast to rebound by 9.2 per cent over the year after falling significantly by 5.5 per cent in 2018.
Confidence low
Across the capital cities, Melbourne will bear the brunt of the market downturn this year with house prices set to fall by 6 per cent.
Houses in inner-city areas are expected to suffer the most, with prices to fall 11.2 per cent in Melbourne’s inner east and 10.2 per cent in the inner south over the year, according to Moody’s.
Despite Victoria’s strong labour market, loans for new and established dwellings have dropped and confidence in the housing market is low, with Moody’s expecting stricter lending standards and out-of-cycle mortgage rate rises by lenders to continue to dampen demand.
After an oversupply of new dwellings in Brisbane in the past two years and the value of apartments in some pockets of the city falling more than 20 per cent since their peak, Brisbane’s apartment market is expected to make a turnaround with 2.8 per cent growth in 2019 followed by 6.5 per cent in 2020.
“A run-up in supply over the past few years has capped gains in the apartment market. However, supply has tightened since its peak; the latest data suggest apartment building approvals have fallen from their 2013 levels. Therefore, a reduced apartment glut will likely usher in a broad-based recovery in apartment values from 2019 onward,” Ms Ell said.
Brisbane’s apartments are forecast to fare better than houses – a reversal of previous price trends in the city – but 1.2 per cent growth is nevertheless expected over 2019, with Brisbane’s west and Moreton Bay-South leading the way.
Property values in Perth are expected to decline further in 2019 despite the stabilisation of commodity prices, according to Moody’s, but a recovery is finally expected in 2020, with property prices to grow by 3.3 per cent as a result of population growth.
Soft landing
Adelaide’s housing market will continue its “stable run” with house prices to rise by 2.6 per cent in 2019, while Hobart’s house price growth will slow to just 2.7 per cent and a predicted 2 per cent fall in 2020 after an unprecedented growth spurt.
Canberra is forecast to have the strongest growth in house prices in 2019 across the capital cities, with a 6.1 per cent surge in values and a 3.3 per cent rise in unit prices.
Moody’s said that while APRA had been able to engineer “a likely soft landing in house prices” the regulatory lending restrictions could be reversed quickly if the market were to cool too quickly.
“If the moves are ultimately successful, Australia’s housing market will remain one of only a handful of developed housing markets to have avoided a sizeable correction,” the report said.
But there was still cause for concern, Moody’s said.
“Given that most of household wealth is in the relatively illiquid asset of housing, there would be greater systematic implications if debt repayment difficulties suddenly become a broader concern,” Ms Ell said.
“For example, if unemployment were to rise, it would force many households to sell at once. So even though regulators can have a handle on managing local risks, households and the economy are still vulnerable to a broader economy-wide shock.”
from Just News Viral http://bit.ly/2CUtZUP
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