Over the past five years, buying property in Australia has been seen as a safe bet thanks to promising price growth in all major markets. But with house prices falling according to the latest figures from the ABS, will this year mark the end of Australian real estate’s glory days?
House prices in Australia at a glance
House prices in capital cities fell by 0.3% on average last month, according to CoreLogic’s February Hedonic Home Value Index results. This overall downturn was especially influenced by dropping prices in Sydney and Melbourne, Australia’s most significant and expensive housing markets. Darwin, Perth, Brisbane and Canberra also saw declines in value.
On the plus side, Hobart showed strong growth, while Adelaide remained steady.
Looking at 2017 as a whole, property values rose 2.2% over the calendar year; however, this pace of growth was slower compared to 2016 when house prices grew by 5.8%, and 2015, when values were 9.2% higher.
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House price values as at 28 February, 2018
What will the Australian property market look like in 2018?
With the rate of house price growth slowing, you might be wondering whether the market will pick back up in 2018 or whether it could be time to sell before the boom turns to bust. Most experts say that despite moderate growth in some cities, a gradual decline in property values is on the cards for this year. Cameron Kushner, Head of Research Australia at CoreLogic predicts there will be a national decline in house values of 2-3% in 2018, which he puts down to stricter lending conditions, more properties on the market, and less interest from investors.
The outlook isn’t all doom and gloom, though. George Tharenou, Chief Economist Australia at UBS, has a slightly more optimistic outlook for the Australian property market in 2018. He thinks that, despite some policy tightening on home loans, property values will nonetheless rise by 0-3%.
Similarly, Paul Bloxham, Chief Australia and New Zealand Economist at HSBC, expects that the Australian housing market will cool but not crash next year. HSBC forecasts show that while growth will be softer than 2017, housing prices will increase by 3-6% in 2018. Melbourne is tipped to show the strongest growth at 7-9%, while Sydney and other cities will experience low single-digit rates of housing price growth.
While the jury’s still out on the state of the property market in 2018 it’s looking like growth will slow to some degree. The good news is that house prices are still strong in many areas, which means conditions are favourable if you’re looking to sell this year.
As always, though, buyer demand is everything. If you’re thinking about selling, ask yourself who might be interested in your property and how much competition is out there, and consider how property values are trending in your area.