Brisbane will record the highest rate of capital growth over the next three years, according to a new report, while Sydney and Melbourne house prices are expected to go through a correction.
These are the findings of QBE’s Australian Housing Outlook 2015-2018, released yesterday. Now in its 14th year, the annual BIS Shrapnel-prepared report confirms Sydney and Melbourne as the standout performers in the current residential cycle, with prices driven mainly by investor purchasers who represent 50% of the national market. However, these two markets are set to give way to Brisbane over the next three years.
According to the report, Sydney’s median house price reached $1.034 million at June 2015 and is forecast to rise to $1.11 million by mid-2016 before resulting in a price correction and decreasing to $1.055 million by June 2018. This is because investors, who accounted for 59% of total residential finance in NSW in 2014/15, will continue to be impacted by APRA’s crackdown on investment and rising interest rates.
In Melbourne, the median house price has risen by 28% over two years, to $734,300 at June 2015. But lower net migration and subsequently slower population growth will lead to weaker underlying dwelling demand from 2016/17. Coupled with investors being deterred from the market due to tighter regulations, Melbourne house prices are forecast to remain steady over 2016/17 before dropping by 2% over 2017/18 to $755,000.
Up in Brisbane, however, median house prices have been more moderate in comparison to Sydney and Melbourne, increasing by 10% in the two years to June 2015, to $511,300. But with its price advantage over Sydney and Melbourne, population growth is forecast to increase due to a boost in net interstate migration, pushing up house prices by 13% over the next three years, to $575,000 by June 2018 – and the highest price growth over this three-year period among all capital cities.
To read more about Brisbane's expected growth head to page 38 of QBE's Australian Housing Outlook.