Melbourne’s house prices are set to fall between 2018 and 2020 and then settle into a period of stagnation.
The Melbourne prediction comes from CoreLogic-Moody’s Analytics Australian Home Value Index Forecast, which says Sydney’s property market should follow a similar pattern to Melbourne over the same period, while Perth is expected to recover from 207.
According to the predictions, Melbourne’s detached housing prices will rise around 7 per cent for the full year before falling from between 0.5 and 1.8 per cent over the next three years.
As for apartment prices, they are tipped to rise between 3-4 per cent in 2017, and will keep rising the following period, but at a slower rate.
The figures come despite there being plenty of uncertainty in the apartment market due to fears of an oversupply.
The reports states that “contrary to popular belief, the correction will likely be more severe in Melbourne detached housing than apartments”.
“Although the rise of housing supply has been more prolific in apartments – for every house, 1.23 apartments were approved between 2013 and the end of 2016 – detached home values have grown significantly more than unit values,” the report says.
“House values in the city have increased 47 per cent over the past four years, while apartment values have risen a relatively muted 23 per cent.
As things start to cool on the east coast, the report says post-boom Perth should start to recover, with detached house prices expected to rise around 4 per cent this year.
“Perth’s housing market is showing signs that the worst is behind,” says the report.
“The trough has likely been reached in the rental market, as rents have stopped declining since late 2016 and have stabilised.”