Melbourne’s explosion of inner-city apartments has led to an over-supply that may lead to Melbourne’s property prices growing at a slower rate than other capital cities over the next few years.
Property forecaster BIS Shrapnel recently released its Australian Housing Outlook report, which said Melbourne still had a lot of supply of inner-city apartments in the CBD, Southbank and Docklands coming into the market in the next two years.
The report featured predictions that Sydney house prices would rise by 19 per cent over the next three years, with their median house price to reach $820,000.
Sydney’s healthy price rises will be driven by property under-supply combined with population growth and overseas immigration.
Perth and Brisbane’s house prices are expected to rise by 16-17 per cent over the same period.
The BIS Shrapnel report predicted Melbourne’s house prices to rise by 6 per cent in comparison.
National Australia Bank chief economist Alan Oster told The Age he expects house prices nationally to grow in line with wages.
“We have an under-supply of houses and very low interest rates and that will keep prices rising,” he said.
“However, rising unemployment will take a lot of the heat out of the market.”
The unemployment rate actually fell from 5.8 to 5.6 per cent last month, but the labour market remains soft.
Mr Oster said unemployment would have to hit 6.5 per cent to start having an effect on house prices, but would need to hit 9 per cent to cause any serious problems in the housing market.