2017 predictions on how Australian house prices will perform | afr.com

Most property analysts are predicting solid growth in the price of houses in 2017, but it’s a different story for apartments, and indeed for all property in “gloomtime” cities Perth and Darwin.
It may not hit the boomtime peaks of 2013, but a survey of property analysts shows most are predicting solid growth in the price of houses in 2017. It’s a different story for apartments, and indeed for all property in “gloomtime” cities Perth and Darwin where analysts have consistently predicted more price falls.
But if you’re in a house in Sydney or Melbourne, you can rest easy. After four strong years in which prices in Sydney and Melbourne grew by 67 per cent and 46 per cent respectively, according to research house CoreLogic, it seems we haven’t reached the end of the run just yet.”
We literally had our biggest week this year in numbers and value in mid December,” said buyer’s agent Simon Cohen of Sydney firm Cohen Handler.
“I think the market will remain pretty strong.”
Capital city growth forecasts.But if you have properties in Perth or Darwin or even Adelaide, the prognosis is not positive. In mining regions, CoreLogic’s head of research Tim Lawless said there’s no sign of them climbing out of a hole.With the Holden production line due to close in 2017, Adelaide’s economy remains weak as few Australians are choosing to move there, BIS Shrapnel Residential Property Senior Manager Angie Zigomanis said.
“There’s more downside there than upside.”
But in between the two extreme ends of the property spectrum lie some surprising nuggets of opportunities – Canberra and Hobart.
“Like the eastern seaboard vs Western Australia, there is the property market of Hobart vs the rest of Tasmania. There’s something about Hobart that’s attracting people there and the main demographic is not retirees,” Mr Zigomanis said.
“It’s the people who are winding down.”
The strong Sydney and Melbourne markets have allowed these wealthy Australians to cash out of their properties and buy in seachange cities such as Hobart, much like what happened in the last boom of 2000, he said.
Likewise Canberra is expected to roar into action after a return in government employment and a steadier economy following the end of the federal election in July. Unlike the past few years, the headline buyers in all markets in 2017 are likely to be local – investors, owner occupiers, or first-home buyers – and less by foreign buyers, analysts say. Forecasts for national capital city price growth range from 1 to 12 per cent.
Top of the prediction league table was property research group SQM Research’s call of a national price growth of between 8 and 12 per cent, assuming the Reserve Bank of Australia cuts the cash rate by 0.25 percentage points in the middle of 2017.
If that happens, SQM says Sydney prices may leap by as much as 18 per cent, followed closely by Melbourne at 17 per cent. If the cash rate remained unchanged in 2017, prices would still rise between 6 to 10 per cent.
“Affluent areas tend to be driven by the prosperity of local economy. And right now, both Sydney and Melbourne have the fastest-growing economies in the nation,”
SQM managing director Louis Christopher said.BIS Shrapnel and CoreLogic’s forecasts were more conservative. CoreLogic’s Mr Lawless said the outlook for 2017 was “becoming increasingly challenging to give direction on”.
“On one hand we have dwelling values broadly rising across most capital cities, however, as we look below the surface, it is clear that individual housing markets are at very different stages of the cycle and responding to vastly different economic and demographic conditions,” he said.
Mr Lawless expects Sydney and Melbourne prices to grow between 9 and 10 per cent in 2017 while Perth and Darwin would continue to lose value. BIS Shrapnel has called a low 1 to 3 per cent house price growth across the national markets, mainly held back by falling apartment prices in Brisbane, Melbourne and parts of Sydney. For houses, BIS Shrapnel said prices would rise in all capital cities except Perth and Darwin. Sydney and Melbourne will top the chart at 4 per cent.AMP Capital Chief Economist Dr Shane Oliver remains bearish on apartments.
In the next two years, Dr Oliver has reaffirmed his prediction Sydney, Melbourne and Brisbane apartment prices will fall as much as 15 to 20 per cent because of the “massive multi-dwelling building boom”.

While Melbourne and Brisbane apartment prices will fall evenly throughout the city, Mr Oliver says Sydney will have pockets of price falls in Parramatta, inner west Sydney and Bankstown. “There’s a [supply] indigestion problem, but Sydney won’t have a supply problem for another two years,” he said.Including houses, he thinks national capital city price gains will slow to around 3
Source: 2017 predictions on how Australian house prices will perform | afr.com

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