Australia’s largest bank expects house prices in Sydney and Darwin to fall by three per cent this year, but for values to rise slightly in Melbourne and other capital cities.
Commonwealth Bank senior economist Michael Workman has tipped the average national house price, which was $668,000 at the end of last year, to flatline in 2018 before improving by two per cent next year.
He expects Sydney house prices to fall three per cent this year, while forecasting values in Melbourne and Brisbane to inch ahead one per cent.
“Australia’s housing prices are very cyclical and usually driven by mortgage rate changes,” he said, adding this cycle was different.
“The correction in the current cycle is driven via the combined dampening effects of a strong credit squeeze on new lending, sharp rises in state government stamp duties, large supplies of new apartments and waning overseas investor interest.”
Mr Workman estimates there will be 203,000 new dwellings built this year, compared with the 214,000 in 2017 and 234,000 in 2016.
“Oversupply fears are, in our view, limited to inner-city Brisbane,” he said.
“Record levels of new dwelling construction in Sydney and Melbourne are being absorbed by strong population growth.”
Around 10 per cent of new detached house construction replaces demolished dwellings in established suburbs, he said.
The average Sydney home value is down 1.4 per cent since the start of the year, while prices have slipped 0.5 per cent in Perth, 0.3 per cent in Melbourne and Adelaide, and 0.2 per cent in Brisbane, according to data from property research group CoreLogic.
Volumes on the auction market have continued to improve after the festive period lull, with nearly 2,000 homes going under the hammer in the week to February 16 and 69.1 per cent finding a buyer.
The average Sydney house price is $835,000, compared with $691,500 in Melbourne and $532,000 in Brisbane.
CAPITAL CITY PRIVATE TREATY MEDIAN PRICES HOUSES
Sydney – $835,000
Melbourne – $691,500
Canberra – $647,500
Brisbane – $532,000 Perth – $515,000
Darwin – $490,000
Adelaide – $439,500 Hobart – $440,000
Combined capitals – $639,401
Sydney – $685,000
Melbourne – $511,850
Canberra – $414,250
Brisbane – $390,000
Perth – $390,000
Darwin – $350,000
Hobart – $326,000
Adelaide – $313,000
Combined capitals – $531,681
Source: CoreLogic Property Market Indicator Summary week ending February 18, 2018.