Melbourne and Sydney’s housing market has been prophesised by many to come crashing down, it has been claimed that the housing market is a bubble that will burst to leave many devastated investors. However, Paul Bloxham Chief Australia and New Zealand Economist at HSBC has foretold that the housing market is more likely to experience a soft landing rather than a crash in 2018.
Bloxham believes that there is still further room for growth in the housing market in 2018, but it will be significantly decreased from 2017. Bloxham say that his predictions for the value growth of the housing market for 2018 are unchanged since July. HSCB is expecting between 3-6% growth for the year. Melbourne is expected to have a price growth of 7-9%. Sydney, however, will have marginally less price growth and is expected to return to between 2-4% increase in 2018.
Bloxham believes reasons for the recent decrease in house prices are “housing supply has ramped up, as an apartment building boom has delivered new dwellings to market” and “foreign demand has pulled back”. He also says, “prudential settings have been tightened, which has also included an increase in lending rates for investors.” Which may have helped cause the decrease in interest, across the housing market.
2018 is expected to show minor gains in price growth for the smaller capital cities of Australia, although not enough to compensate for Melbourne and Sydney’s loss in price growth.