They set an imbalance between supply and demand to spur property price growth of up to 20% in the next few years, according to new research. Insurance group QBE’s Australian Housing Outlook 2019-2022 report forecasts house price growth in all major cities. A full report download available here.
According to QBE, over the three years up to 2022, Brisbane is set to experience the sharpest increase in house prices. Brisbane continues to keep a substantial affordability benefit over other capital towns on the east coast and as job opportunities improve, demand from home buyers priced out of these towns is anticipated to rise. Following a small increase in 2019/20, median home price development is predicted to accelerate as the housing undersupply is absorbed from 2020/21. Median house price growth is predicted at an average annual rate of 6.4 percent over the next three years, bringing the median house price to June 2022 at $660,000.
Units account for a lower proportion of fresh supply in Adelaide, than the other western capital cities, although this has risen in the latest years. Medium and high-density residential buildings are anticipated to represent 38 percent of the city’s complete residential supply in 2018/19, compared with 33 percent in the previous decade. As a consequence, any state-wide over-supply is projected to be more focused on the unit industry than the residential industry. It is anticipated that the higher rate of unit construction in the latest years will mean more modest price development for units than for detached homes. It is projected that the median unit price will grow by a modest 1.5% per annum over the three years to June 2022.
Darwin, with the supply of new dwellings significantly weakened and expected to decline further in 2019/20, supply is projected to drop below the fundamental demand for new dwellings; which is also significantly below prior rates. Population growth is expected to moderately enhance as the increasing population exodus to the interstate continues its course. Ultimately, it is anticipated that the over-supply of housing on the Darwin market will start to be absorbed, with the market expected to return to balance by mid-2021 and start putting upward pressure on property prices. A complete increase of 7 percent in Darwin’s average home cost is predicted in the three years up to June 2022, with much of that development focused at the back end of this period.
Unit returns have enhanced and this is anticipated to attract some investors with interest rates also dropping in 2019. In the lack of any big job-generating sectors in Darwin, however, there will be soft population growth, rental demand, and rent growth. Other major cities with price rise, Canberra (6.5%), Perth (6%), Sydney (6%), Melbourne (5%) and Hobart (4%). Unit values are projected to rise sharpest in Darwin (9%), followed by Canberra (7%), Perth (5%), Adelaide (5%), Melbourne (4%), Brisbane (3%) and Hobart (3%). QBE Lenders’ Mortgage Insurance CEO Phil White. says the growth will come in response to a supply and demand imbalance. Building approvals fell 19% in 2018-19 and completions are forecast to fall further by 2020-21 – down 22% on the five-year average. “That’s well below underlying demand,” he says.
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