Home prices in Brisbane, Perth and Canberra are expected to rise the most over the next three years-while the Sydney market slows.
BIS Oxford Economics, an industry analyst, said in its latest report that property price growth would remain weak, even in some markets, in the short term.
It believes this is due to tighter lending standards, the especially`s severe crackdown on interest-only loans and a record housing completion rate of more than two hundred thousand units a year, which could lead to oversupply in some states.
Property buyers should not be too excited, BIS warned, with record low interest rates and a "relatively stable economic environment despite constraints" that would ease the possibility of a housing slump.
But starting in 2021, there should be some "rise" in the housing market, as "high immigration rates are likely to persist in the next few years"-and "economic conditions start to strengthen and supply falls below basic demand."
Sydney and Darwin lagged behind
Sydney house prices are expected to rise only 3% by 2021, the slowest of any capital city in Australia.
Home prices in Australia`s largest cities have risen 85 percent since 2013, with investors accounting for more than half of the value of mortgages during the period and pushing prices to record highs.
Housing prices in Sydney were typically around 650000 yuan in 2013, compared with an average of A $1.2 million in Sydney today.
The median home price peaked at 1.2 million yuan in June 2017 and has since fallen (to 1.1 million yuan) because of restrictions on mandatory lending policies from Australia`s prudential regulator (APRA).
The BIS forecasts that Sydney`s median price will fall 2 percent in the next fiscal year (2018 / 19), but a shortage of housing supply will stop prices from falling sharply.
"by 2019 / 20, a combination of price adjustments, undersupply and improved economic prospects is expected to stabilise house prices and likely a modest increase in 20120-21."
Darwin, by contrast, hit the peak earlier. In June 2014, the local house hit a midrange of 620800 yuan. Since then, Darwin`s house prices have fallen 19% to 505000 yuan.
Its resource boom led to a surge in residential construction. But after the boom collapsed, so did Darwin`s population growth, which led to an oversupply of housing.
Darwin then saw a sharp drop in the number of new house.
"the collapse of new housing construction is expected to absorb excess inventory during this period," BIS predicted.
It predicts Darwin`s house prices will continue to rise in the next fiscal year, rising 5% by 2021.
Brisbane, Canberra and Perth had strong performances
BIS`s forecast is that Brisbane will achieve its strongest growth in the next three years, growing 13 percent to the median of 620000 yuan.
If its prediction is correct, it will be an astonishing improvement. House prices in the state of Kunzhou are growing at a modest rate of 1% a year.
Oversupply may drag down the market, but the sunny state is beginning to see the rise of interstate immigration, especially from Sydney, where potential buyers are being offered a discount to relatively low-cost housing in Brisbane.
Canberra and Perth ranked second in price increases in 2021, up 10 percent to 770000 yuan and 570000 yuan, respectively.
"the Australian capital has the highest household income, and Canberra`s housing affordability remains attractive," BIS said.
In the coming years, Perth is expected to see "modest growth" before "seeing stronger growth" in 2021.
"House prices in Perth appear to have bottomed out," said Ziegmanis (Angie Zigomanis), senior manager at BIS. "the pace of price decline has slowed, the net inflow of overseas migrants has resumed growth, and the volume of interstate immigration has peaked. It`s improving now. "
Melbourne, Adelaide and Hobart
Melbourne, on the other hand, is expected to be better than Sydney, with prices rising 6% over three years.
Investor loans led to higher prices, but far less than Sydney.
In the last five years, prices of Melbourne have soared by 65 per cent, reaching a peak of $892,000 last December.
"population growth in Victoria is expected to be a key factor in Melbourne`s house prices as investor demand continues to weaken to support homeowners` own housing needs," Ziegmanis said. Although the completion of the new housing is expected to continue to rise to 2018. But supply will be achieved mainly through population growth, "- from strong overseas and interstate immigrants.
Prices for Adelaide (9%) and Hobart (8%) are expected to grow strongly over the next three years.
With the closure of South Australia`s auto industry, its economic and real estate markets are now in a downturn.
