Demand for new houses across Australia’s eastern seaboard has peaked and is set to decline, a new report has suggested.
According to BIS Oxford Economics’ Outlook for Residential Land 2017–2022 report, the recent peak in demand for properties in major centres across Sydney, Melbourne and southeast Queensland “will begin to fall away”.
However, the report states that the predicted downturn in demand will be “moderate” as property oversupply is predominant in the apartment and unit sector, while the market is still experiencing “deficiency in detached house stock”.
Further, the BIS Oxford Economics study states that price growth in the housing market has led to increased demand from home buyers for new houses.
“Steady price growth in houses in the initial stages of the housing construction upturn improved land price affordability and shifted some demand from the established house market to the new house and land market,” senior manager and report author Angie Zigomanis said.
“This not only encouraged a greater percentage of home purchasers to opt for a new house over an established one, but also established house owners to sell up and upgrade to a new, larger house.”
However, Mr Zigomanis predicted that this trend will soon peter down as land prices continue to escalate.
“Most markets saw house price growth outpace land price growth through the early stages of the upturn, which improved the value proposition for a new house,” the senior manager continued.
“That said, land prices have now largely caught up and this gap will have narrowed, making new housing less attractive.”
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