Posted: 18 October, 2016
Australian Inner-City Property Prices Could Be About To Drop
Good news for some.
A leading Australian economist says that inner-city property markets are about to drop in value.
Deloitte Access Economics believes that the inner-city apartment markets in cities like Melbourne and Brisbane are oversupplied, which will result in falls in value by up to 15% by 2019.
"Booming house prices do help an economy as they occur," said Chris Richardson from Deloitte Access Economics. "Eventually, though, they start to hurt."
"Right now in Australia we have more supply of inner-city apartments being built — in Melbourne, in Brisbane, in Sydney — than we've ever seen before," he said.
"That will keep coming for quite some time — 2017, 2018 you'll see that wave continue to crest higher.
"Still there in droves today, but increasingly in the future, whether they're foreign buyers and China is cracking down and Australian states are raising taxes, or domestic buyers wondering about whether those prices can hold."
However Property Council's chief executive, Ken Morrison believes that there is an under-supply problem in Sydney which the current construction boom should help to fix.
"When Sydney takes almost a decade off supplying the market for the growth that's going into that city, then that's like a pressure cooker waiting to have an impact on prices when demand comes," he said.
"That's what we're experiencing at the moment.
"When you under-supply a market for more than 10 years, you do run the risk that when demand returns to that market, the prices leap and there's not enough housing to keep those prices down."