There is a weaker year ahead for our housing markets.
Australian capital city housing markets have generally ended 2016 on a positive note with lower interest rates and resurgent investor activity supporting rising buyer and seller activity over the second half of the year.
Sydney and Melbourne remain the standout performers driven by surging migration, relatively strong economies, an overall underlying shortage of housing and heady confidence.
The Canberra market also continues to rebound strongly following a subdued period of activity.
Other housing markets have recorded moderate to subdued results over 2016 reflecting the impact of local economic activity.
The clear underperformers over the year remain the resource capitals of Perth and Darwin however early signs are emerging of a bottoming out of the recent sustained decline in prices in those markets.
Although Brisbane, Adelaide and Hobart are set to record marginally weaker price results over 2016 compared to the previous year, annual growth will nonetheless remain clearly positive and with those markets ending the year with rising demand.
Capital city unit markets have been impacted variously over 2016 by the recent record surge in new inner city apartment development reported in most capitals.
Despite unprecedented supply, unit prices in Sydney and Melbourne have increased strongly over the year, although growth levels in the Melbourne property market declined over the latter part of the year.
Brisbane, Perth and Darwin unit prices were however weaker over 2016 with no sign of an end of year revival in those markets.
Unit prices in Adelaide and Canberra again recorded modest but nonetheless steady growth over 2016.
Flatter prices outlook for 2017
The 2017 prospects for capital city housing markets remain mixed with Sydney and Melbourne likely to continue to lead the pack.
Activity levels in other capitals are likely to remain steady overall with prices growth however again relatively benign and constrained by low growth, low income economies generally.
Lower interest rates in 2017 are likely to continue to bolster housing markets with an underperforming national economy likely to require further stimulus from the Reserve Bank.
Improved affordability and confidence from lower rates will however be dependent on banks passing on official reductions if and when they occur with out-of- cycle mortgage rate rises increasing through 2016 as banks acted to maintain profits.
House price growth, although remaining positive in most capitals through 2017, will likely track in a narrow range of up to 5 percent annually for the top performers.
The Darwin and Perth markets are set to bottom out in 2017 following a lengthy period of weak activity with prices at three year lows. although a return to sustained growth for the Perth market remains dependant on a stabilisation and improvement in the local economy.
What’s ahead for apartments?
Unit markets will continue to be influenced by significant levels of new stock acting to push supply ahead of demand through 2017 with varying impact on local prices.
The Sydney market remains chronically undersupplied with solid demand continuing to put a floor under unit prices.
Record new apartment supply in the Melbourne CBD will continue to outstrip demand with downward pressure on prices to continue in that sub-market.
Strong demand and constrained supply for suburban units however will offset the weaker CBD market with overall Melbourne unit prices growth likely to remain positive over the year.
Unit prices in Brisbane, Perth and Darwin can be expected to continue to fall with Adelaide and Canberra however to produce positive but modest price outcomes over the year.