Australian home prices set for years of decline – is there hope?

Australian home prices set for years of decline – is there hope?

House prices and to a lesser extent, unit prices, in both Sydney and Melbourne have had some amazing growth over the past 4 to 5 years.  But does this mean that prices in both of these cities will fall as suggested?

“Australian home prices are set for years of decline, according to new analysis of property listing and sales data by Capital Economics.”

My immediate opinion on a long term declining market is a big ‘NO‘.  Not happening.  Is there hope?  Absolutely!

And here are my four main reasons why.

  1. Housing markets are VERY different to unit or apartment markets.  There may indeed be a cooling of the latter but I cannot see it happening in the housing sector.
  2. Australia is growing by approximately 400,000 people per year and two thirds of this growth is in NSW and Victoria (don’t they need to be housed?).
  3. Melbourne is set to become Australia’s largest capital city by the 2030’s (source:  Australian Bureau of Statistics).
  4. The apartment market in CBD Melbourne and Docklands has been suffering an oversupply for the last 10 years or so but this hasn’t meant prices have fallen, they just haven’t grown – more info here.   This just simply means longer vacancies, especially in older apartments as most tenants want to live in the newer apartments.

What are your thoughts?  Where do you sit in the Australian home price debate?

Read the full article over at ABC News:  House prices predicted to keep falling, but Melbourne and Sydney units to take biggest hit


John Pidgeon
Director – SOLVERE