Housing markets across Australia are set to lose some steam in 2016, according to a report released by Australian property search firm Domain Group on Monday. Property prices across major cities are expected to slow dramatically as investors continue their exodus from the market, the study predicts.
Double-digit growth in major housing markets such as Sydney and Melbourne in the last two years will not be repeated, according to the group's latest State of the Market Report.
Sydney’s property prices surged 16 percent in 2015 but the market is expected to slow to a growth of about 4 percent next year, whereas Melbourne -- Australia's second-strongest property market -- will post a single-digit price growth of 5 percent in 2016, compared with 12 percent in 2015. Queensland capital Brisbane will also witness a slight fall in price growth from 6 percent in 2015 to 4 percent next year, according to Domain Group's research.
The report states that while housing prices are expected to increase in 2016 across all capital cities, they will do so at more subdued rates.
The cautious forecast by the property classifieds website is another in a set of reports released recently, which point to an oncoming slump. Housing loan commitments fell 6 percent in October from a month before, official statistics released by the Australian Bureau of Statistics last week showed.
Domain’s senior economist Andrew Wilson said in the report that a slowdown in property price growth could bring in first-home buyers, who have stayed away from the overheated market in the last two years. However, he warned that these numbers will fall short of elevated levels seen in 2015.
Australian real estate market watcher SQM Research has predicted average capital city dwelling prices to rise between 3 and 8 percent in 2016, while ANZ Bank gave a more modest outlook of 1.4 to 3.2 percent growth across Australia, according to a report by Australian Financial Review.
Moody’s Investors Service said in a report last month that steep housing prices forced households in Sydney to spend an average of about 40 percent of their income on mortgage repayments in October, up by more than a third compared to same period last year.
“Housing affordability in Australia has deteriorated significantly over the 12 months as current low mortgage interest rates have failed to offset the impact of rising house prices over the past year,” the rating agency said.