Sydney house prices to drop by 5 percent in two years: BIS Oxford Economics

Sydney’s house prices could experience a correction starting in the second half of 2017 after years of growth, according to a leading economic forecaster. 

House prices will drop by 5 percent in two years starting later this year, said BIS Oxford Economics managing director Robert Mellor said at the Building Industry Prospects conference in Sydney, according to a post on domain.com.au.

The forecasting firm was formed recently after Oxford Economics acquired BIS Shrapnel and the name was changed to BIS Oxford Economics.

Sydney has enjoyed a four-year property boom, during which the median house price has climbed to more than $1 million.

“Given that price growth over the last 12 months has been much greater than we would have anticipated six or 12 months ago we now expect price declines probably between 2017 and 2019 somewhere in the order of 5 percent in the detached housing market in Sydney,” he said.

Apartment prices are likely to see an even bigger correction, according to the forecaster.

The median house price was likely to peak “at $1.2 million” by mid-2017 before falling, he said. These price declines are more substantial than those predicted mid-2016 by the firm.

But even if prices fall by $60,000 to $70,000, they would still be “above where they were six months ago”, he said.

“By June this year [house prices] will be up 80 percent since June 2012.”

The apartment market, however, is likely to drop by much higher levels.

Mellor anticipated that those who paid “high prices off-the-plan” might see price declines of 10 percent or higher.

These falls in prices would also be likely in the Brisbane and Melbourne apartment markets, where prices could “easily” drop 10 percent in the next two to three years.