Mild Property Correction Ahead | BIS Shrapnel

Another day, another property forecast.

That’s the way it seems at the moment.calculator statistics

While some are predicting a 7- 10% downturn a year or two down the line, forecaster BIS Shrapnel says property prices in the Melbourne and Sydney property markets will only experience a “mild correction” during the next three years.

In its annual Housing Outlook report: Residential Property Prospects 2015 – 2018 BIS Shrapnel expects:

  • Sydney house prices will rise by 7 per cent over the 12 months to the middle of next year, then falling 5 per cent over the subsequent 24 months,
  • Melbourne house prices will rise 5 per cent for the 12 months to the middle of next year before falling 2 per cent over the following 24 months.

They suggest that continuing low interest rates and robust demand for housing, driven by immigration, should help insulate property prices in Australia’s two largest cities from more than a modest downturn.

Not surprisingly, due to the oversupply in some areas, the forecaster expects the correction in prices of apartments in both cities to be a little more pronounced, especially in Melbourne:

  • Sydney unit prices are forecast to rise 5 per cent for the year to mid-2016 before falling  by 7 per cent over the two years to mid-2018.
  • Melbourne unit prices could to rise 1 per cent over the year to mid-2016 before falling by 6 per cent over the following two years.

It’s not all that bad.

Just look at the chart below – even if prices did drop back a  little, that’s really to expected when you’ve had such significant capital growth.

Sydney property values 2

Not everyone expects such low growth next year

 SQM Research 2016 Housing Boom and Bust Report forecasts that average capital city dwelling prices will rise between 3% and 8% for the full 2016 calendar year.

And they’re not expecting a slowdown until 2017.

They forecast the Sydney property market to rise between 4% and 9% in 2016 and Melbourne’s’ property market is forecast to overtake Sydney and be the outperforming capital city in 2016 with a forecast rise in dwelling prices of between 8% to 13%.

We’re in for some interesting times ahead.

Want more of this type of information?

Kate Forbes


Kate Forbes is a National Director Property Strategy at Metropole. She has 15 years of investment experience in financial markets in two continents, is qualified in multiple disciplines and is also a chartered financial analyst (CFA).

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