This article is from the Australian Property Journal archive
State by State Housing Outlook
New South Wales
Sydney house prices declined in 2004/05, following a 57% rise between June 2001 and March 2004 which put houses out of reach of many buyers, according to BIS Shrapnel. With interest rates now on an upward trend, affordability is still a major concern with BIS Shrapnel’s Robert Mellor expecting prices to weaken further.
The markets in Newcastle and Wollongong have also suffered declines over the past two years. BIS Shrapnel anticipates the median house price will improve gradually in Newcastle and Wollongong over the next three years, as underlying demand remains strong relative to supply, and affordability continues to be more favourable than Sydney.
Victoria
Growth in the Melbourne median house price has slowed during the past two years as a considerable stock deficiency was absorbed and the net interstate migration inflow reverted to a small outflow. With underlying demand weakening slightly and the market fairly much in balance, BIS Shrapnel expects price growth to be limited due to Melbourne house prices already being ‘fully valued’.
Queensland
Brisbane house prices have also hit an affordability barrier after a period of extraordinary growth. BIS Shrapnel estimates the Brisbane market is suffering from the worst affordability crisis since 1990. Although there is still huge demand for housing in Brisbane, current high price levels are constraining growth.
Despite the constriction on growth, the median house price picked up slightly in 2005/06 and it would appear that Brisbane households are adjusting to higher price levels. While the economy remains strong, Mellor expects a shortfall in housing supply to push prices up.
The Gold Coast and Sunshine Coast markets have generally moved in tandem with Brisbane, and the median house price in both regions is expected to exhibit further growth during the next three years, according to Mellor.
BIS Shrapnel believes price growth in Townsville and Cairns has been strong due to its lower median house price compared to south-east Queensland, which has encouraged higher levels of migration and buoyed prices.
South Australia
Price growth in Adelaide has been reined in by an emerging oversupply of housing stock, according to BIS Shrapnel. An improvement in the Adelaide median house price will be minimal during the next two years, before picking up slightly in 2008/09.
Western Australia
Compared to the eastern capitals, Perth’s median house price increased substantially during 2004/05 (+16%) and the growth rate has accelerated to over 20% in 2005/06, due to strong underlying demand and a booming state economy. However, Mellor states:
“Affordability is clearly starting to become an issue. Perth’s median house price has risen 113% since 2001. We expect price growth will slow in 2006/07, rising only three% as the boom in the Western Australian economy moderates.”
Tasmania
Growth in the Hobart median house price slowed during 2004/05, after a 94% increase over the two years to June 2004. The net interstate migration inflow has declined to almost zero and the median house price, while still expected to show improvements, will be more in line with the growth in other capitals, according to Mellor.
The Australian Capital Territory
Canberra’s median house price has declined following a period of strong price growth — putting the capital’s median house price on par with prices in Melbourne. BIS Shrapnel expects affordability and rising interest rates to limit price growth in the Canberra market.
The Northern Territory
Darwin’s median house price jumped 24% in 2003/04 and a further 10% in 2004/05 due to the boom in oil and gas investment. BIS Shrapnel forecasts growth in the Darwin median house price to wind back significantly in 2006/07 in response to rate rises, with the slowing resources boom to cause a further easing in price growth during 2007/08.
