Property prices set plunge in 2018 and 2019

AMP Capital has warned that Australian median residential property prices are expected to drop sharply this year and in 2019. 

AMP Capital chief economist Dr Shane Oliver says house prices are set to fall by up to $1000 a week in 2018 with further falls in 2019.

However, he said a national property market crash, which would involve falls of about 20 per cent, was unlikely given Australia’s strong population growth, tightening lending standards and different economic conditions driving rises and falls in national capitals.

“To see a property crash we probably need much higher interest rates or unemployment, neither of which are expected, or a continuation of recent high construction for several years, which is unlikely as approvals have cooled from their 2016 highs,” Dr Oliver said.

However, he pointed to Australian capital city home prices falling 0.2 per cent in March, their fifth monthly fall in a row.

He said this has brought annual growth down to 0.8 per cent from 11.4 per cent in May last year. Most of the recent weakness relates to Sydney and to a lesser extent Melbourne.

“This is unusual in that property price downturns are usually preceded by significant interest rate increases,” Dr Oliver said. “Consistent with the fall in Sydney and Melbourne property prices, auction clearance rates and home sales have also fallen.”

According to HTW analysis, all mainland capitals, except for Melbourne, have passed their peak. They are now starting to decline or in a declining market and approaching the bottom of the market.

An award winning author and journalist, commentator, lecturer, and speaker, Leon is a freelance business journalist who covers a range of areas including politics, strategy, globalization, leadership and all the big trends ahead. His main skill is summing up all the news that’s around. For the last 30 years, his main focus has been on management issues. He also produces two podcasts for RMIT University, Talking Business and Talking Technology. Leon has worked for Fairfax, News Limited, AAP and the Herald and Weekly Times.

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