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Economists expecting property prices to tumble

Economists expecting property prices to tumble

Dwelling values will continue to fall in most capital cities, with Sydney’s property market to take the biggest hit, according to a survey of economists.

A finder.com.au survey of 15 leading economists and industry pundits has revealed that most respondents are expecting home values across the nation’s capital cities to slip further in 2018, with the exception of Adelaide and Hobart.

When asked to predict the trajectory of home prices in Sydney, 93 per cent of respondents noted that they expect prices to fall, with a majority (57 per cent) expecting dwelling values to decline by at least 5 per cent in 2018.

All 7 per cent of those expecting prices to rise predicted a moderate increase of 1 per cent to 2 per cent.

Respondents predicted a similar outcome in Melbourne, with 93 per cent expecting the Victorian capital’s property prices to slide.

Half of the respondents (50 per cent) predicted a fall of 3 per cent to 4 per cent. Of those expecting a rise, all 7 per cent also expected a slight uptick in home values of 1 per cent to 2 per cent.

All respondents predicted home values to drop in Darwin, with a majority (55 per cent) expecting prices to moderately fall by 1 per cent or 2 per cent.

Further, 75 per cent of surveyed respondents predicted housing prices to drop in Perth, with the bulk of pundits (42 per cent) expecting a decline of 1 per cent to 2 per cent.

The Brisbane property market is also expected to take a hit, with 61 per cent of pundits predicting that prices will fall. Of those expecting a rise, 31 per cent predicted an increase of 1 per cent to 2 per cent, with a further 8 per cent expecting a spike of 3 per cent to 4 per cent.

Finder’s insights manager, Graham Cooke, noted that cooling housing market conditions could present first home buyers (FHB) with an opportunity to step onto the property ladder.

“For those mulling over buying their first property, this year could be a good time to snap up a bargain if prices do take a tumble,” Mr Cooke said.

“With some heat removed from the market, cheaper dwelling prices could be a first home buyer’s ticket into the property market.

“A cheaper price tag means they’ll have a smaller deposit to come up with, meaning they can jump onto the property ladder sooner.”

Adelaide on the rise

Conversely, a majority (55 per cent) of pundits have predicted a rise in Adelaide’s dwelling values. Of those expecting a fall, 18 per cent expected a drop of 1 per cent to 2 per cent, an additional 18 per cent predicted a decline of 3 per cent to 4 per cent, and 9 per cent expected prices to slip by 5 per cent to 6 per cent. 

Hobart is expected to be the best performing capital city in terms of price growth, with 91 per cent of respondents expecting home values to rise, 18 per cent of which have predicted an increase of over 6 per cent. The remaining 9 per cent of pundits that predicted a fall expected a decline of 5 per cent to 6 per cent.

“The quieter cities of Adelaide and Hobart could be hotspots for investors wanting to unlock capital growth, or for home buyers looking to put their property on the market,” Mr Cooke added.

Finder surveyed the industry pundits prior to the Reserve Bank of Australia’s cash rate announcement on Tuesday (5 June), in which the central bank continued the record-breaking “hold” cycle, leaving the cash rate at 1.5 per cent.

All surveyed respondents correctly predicted the RBA’s hold verdict.

[Related: RBA flags tighter credit as rates remain on hold]

Economists expecting property prices to tumble
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