QBE’s annual Australian Housing Outlook has forecast price growth to begin cooling from 2015/2016.
Released yesterday, the 2014 – 2017 report researched and prepared by BIS Shrapnel anticipates housing stock deficiency will remain a key indicator of growth in 2014/2015, especially in Brisbane (7.4 per cent) and Sydney (7.2 per cent).
However, the report found that a combination of further price growth, an easing of the dwelling deficiency and a forecast tightening in interest rate policy beyond the next 12 months, is expected to eventually weigh on the residential market and cause price growth to slow across most cities from 2015/2016.
“In its 13th year the Australian Housing Outlook has again analysed the drivers and influencers within the housing market to forecast trends for the next three years and deliver key insights into the future of the mortgage industry,” QBE LMI chief executive Jenny Boddington said.
“For the first time, in addition to providing an overview and outlook of the residential markets of each of Australia’s state and territory capital cities, this year’s report also looks at selected regional centres in New South Wales, Queensland and Victoria,” Ms Boddington said.
“Expanding the coverage of the Housing Outlook has allowed us to be much more granular than in the past, and for the report to forecast housing prices in key areas such as Newcastle, Geelong and the Gold Coast,” she said.
The report suggests that while while new dwelling commencements are currently exceeding average underlying demand in most states, new supply will take some time to address tight vacancy rates and change the pattern of price rises.
“Most interestingly this year is that the report has forecast a dampening of growth before prices begin to stagnate as early as next year,” Ms Boddington said.
Median house price growth over the next three years is forecast to be strongest in Brisbane (17 per cent), with further growth also expected in Sydney (9 per cent), Melbourne (5 per cent), Adelaide (6 per cent) and Hobart (5 per cent).
However these markets are forecast to experience either a decline in their dwelling deficiency or a rising oversupply through to 2016/2017, according to the report.
The weakest price performance is forecast for Perth, Canberra and Darwin.