The Sydney Morning Herald – 23 October, 2014.
By Stephen Nicholls
Australia’s property prices will be “flat as a pancake” over the next decade, Domain Group senior economist Dr Andrew Wilson says.
The resources boom is over, the international economy “can’t get its act together” and investors will soon start to lose interest. “Going forward we are going to have a much flatter housing market in terms of price,” Dr Wilson said.
Even growth in the stand-out city, Sydney – up 3.8 per cent in the September quarter and 16.6 per cent in the past year – is moderating from the higher levels of last year.
Having the best economy in the nation, strong migration and continuing confidence meant the city was the star performer – but despite low interest rates, Dr Wilson believes slowing income growth was putting a brake on price growth. “Investors will become less interested in residential property in Sydney and start looking at other asset classes,” he says.
There would no longer be any need for the regulatory controls being proposed to contain the investor splurge.
He doesn’t agree with McGrath Estate Agents chief executive, John McGrath, who told Domain this week “there is probably 15 per cent or more growth before this cycle plateaus”. Mr McGrath argues this could occur because of a lack of supply and continuing demand from local and overseas investors.
Looking to the Sydney regions over the September quarter, Domain Group said the strongest performers were the upper north shore/north west at 9.3 per cent growth; the inner west at 8.8 per cent; city and east 5.8 per cent; the lower north shore at 5.7 per cent and the northern beaches at 5.2 per cent.
The September quarter figures, released this week, showed that apart from Sydney, the rest of the Australian housing market “generally tracked backwards”.
House prices were down 1.7 per cent in Canberra, Perth fell 1.5 per cent, Brisbane and Hobart dropped 1.3 per cent and Adelaide fell by 1 per cent.
Darwin was the only other star at 2.9 per cent.
Prices were up just 1 per cent in Melbourne. Agents said this figure seemed more representative of the market than the 3.7 per cent growth suggested by another data provider for the same period.
Barry Plant chief executive Mike McCarthy told Domain that he believed the Melbourne market was set for a steady period.
“The market has had a big recovery last year and now this year it is holding ground in terms of the number of sales,” he said.
“If you look at our average price, we had a big lift last year, and this year we’re up, but that seems to be easing at the moment. To me it’s a balanced market.”