According to the QBE Australian Housing Outlook Update 2018, Sydney’s house prices will slip by approximately 5.4 per cent by 2020, with the city’s unit values also expected to fall by 6.3 per cent.
Darwin is the only other capital city where home values are expected to drop over the same period (2.8 per cent).
Conversely, QBE expects house prices in Hobart to experience the largest increase by 2020 (18.3 per cent), followed by Canberra (13.1 per cent), Adelaide (9.3 per cent), Brisbane (9.0 per cent), Melbourne (7.3 per cent) and Perth (3.9 per cent).
The insurance provider also predicts that unit prices will decline in Darwin (19.1 per cent), Brisbane (9.8 per cent), Sydney (6.3 per cent), Melbourne (3.6 per cent) and Perth (1.8 per cent), while forecasting unit price growth in Hobart (16.4 per cent), Adelaide (2.5 per cent) and Canberra (2.3 per cent).
Further, QBE expects increase in house prices across Australia’s regional markets, with growth forecasts for Launceston (12.5 per cent), Geelong (9.4 per cent), Newcastle (9.2 per cent), Ballarat (7.2 per cent), Toowoomba (6.3 per cent), Gold Coast (4.7 per cent), Bendigo (4.3 per cent) and Wollongong (1.6 per cent).
FHB activity on the rise
The QBE report, which builds on the original report from October 2017, also noted “stronger than expected” growth in first home buyer (FHB) activity, with 104,100 loans approved for FHBs across the country in 2017, a 17.2 per cent increase from the previous year.
QBE attributed the rise to stamp duty concessions introduced in NSW and Victoria in 2017 as well as tighter investor lending restrictions imposed by the Australian Securities and Investments Commission (ASIC).
“As a result of the tightened investor lending controls, investors have reduced buying power and are less able to outbid first home buyers, with both parties typically competing for the more affordable properties with attractive yields,” QBE noted.
FHB loan activity was strongest in the ACT, with a 35.9 per cent rise from the previous year, followed by NSW (34.4 per cent), the Northern Territory (32.8 per cent), Victoria (16.3 per cent), Queensland (15.2 per cent), South Australia (7.1 per cent) and Western Australia (6.2 per cent).
Tasmania was the only state to experience a reduction in FHB loan activity (7.3 per cent).
[Related: Real estate winners and losers: 2020 forecast]