(Australian Associated Press)
Housing price growth is tipped to slow dramatically next year, with a glut of apartments in Melbourne and Brisbane a key driver.
Residential property prices will rise by 4.4 per cent this year before growth slows to 1.9 per cent in 2018, the ANZ Australian Housing Update for June predicts.
“Nation-wide housing price growth has peaked, and we expect prices to slow sharply this year and next,” ANZ economists Daniel Gradwell and Jo Masters said in their report.
“The potential over-supply of apartments remains a key concern, particularly in Melbourne and Brisbane, where prices are already under pressure.”
Building approvals are already down around 20 per cent after peaking in 2016 and the economists expect they could fall up to another 10 per cent in the next six to 12 months.
“Melbourne led the slow-down, but momentum is now also slowing in Sydney and Brisbane,” they said.
Both Melbourne and Brisbane have about 1.5 years worth of construction already underway, almost double the average backlog before the global financial crisis.
The economists noted that a range of policy measures from regulators and the federal government would probably not have a lasting impact on housing affordability.
Meanwhile, a separate report indicates more Aussies are falling behind on their mortgage repayments.
A Moody’s Investors Service report released on Tuesday shows that the percentage of borrowers more than 30 days behind on their home loan rose to 1.65 per cent for the first quarter of the year, compared with 1.49 per cent at the same time last year.
Moody’s vice president and senior analyst Alena Chen said an increase in delinquencies is common in the first quarter due to increased spending over the holiday season.
The report covered loans in Australian residential mortgage-backed securities transactions, which are considered representative of the broader market.
Meanwhile, the drop in home prices in Sydney and Melbourne paused last week but only slightly.
After seven straight weekly declines, Sydney property prices remained flat in the week to June 4, while Melbourne prices inched 0.3 per cent higher, the first rise in a month.
Sydney home prices have risen by 3.6 per cent in 2017, and are 11.4 per cent higher than at the same time last year.
Melbourne property values have also climbed, by 3.1 per cent, this year and are 11.8 per cent higher than a year ago.
The first week of winter featured 2,545 auctions, down from 2,885 the previous week, with 73.9 per cent of properties that went under the hammer sold.
CAPITAL CITY PRIVATE TREATY MEDIAN PRICES
Sydney – $971,500
Melbourne – $705,000
Canberra – $650,000
Darwin – $600,000
Brisbane – $519,000
Perth – $505,000
Adelaide – $450,000
Hobart – $373,500
Sydney – $750,000
Melbourne – $535,000
Perth – $410,000
Canberra – $409,000
Darwin – $385,000
Brisbane – $392,000
Adelaide – $331,000
Hobart – $310,786
Source: CoreLogic Property Market Indicator Summary week ending June 4, 2017.