Melbourne house prices will outpace the Sydney market with 10 percent growth over the next three years, QBE's latest Australian Housing Outlook report forecasts.
Investor lending curbs will hit Sydney more heavily pulling its median house price down 0.2 percent to $1,150,000 by 2020 from the current $1,178,000, according to the report by QBE's Lenders Mortgage Insurance unit produced with consultancy BIS Oxford Economics.
House prices in Melbourne will rise from $852,700 to $940,000 by 2020, the report predicts.
The Sydney dip would be limited to just the two next years, with a 1.1 percent fall in the year to June 2018 and a 2.6 percent decline the next year before recovering to post a 1.3 per cent increase in the year to June 2020, the report predicts.
QBE’s Housing Outlook 2017-20 reveals the majority of Australia’s cities will experience house price growth with Canberra house prices to rise 16%, Hobart to 11%, Melbourne to 10%, Brisbane to 7%, Adelaide to 7% and Perth to 3% over the next three years.
The picture is less rosy for apartment owners, with unit prices set to fall for Brisbane 7%, Melbourne 5%, and Sydney 4%.
QBE Lenders’ Mortgage Insurance CEO Phil White said that while unit prices will soften, the sector will play a growing influence on the nation’s property market over the coming decades.
“With so many Australians priced out of the housing market, the Australian Dream of owning property is increasingly turning to high and medium density apartments,” he said.
“Units contribute to a greater share of the market as changing lifestyles and affordability dictate property choices.
“Encouragingly, that dream should become a reality for more Australians, with improving affordability overall.”
Units now account for 46 per cent of all residential construction across the country.
The report forecasts Sydney, Melbourne, Adelaide, Perth and Darwin to become more affordable in the next three years. Hobart and Canberra are expected to become less affordable to June 2020.
“Recent low affordability in Sydney and Melbourne should stop purchasers from taking larger mortgages and bidding up prices even more,” he said.
“With more lending restrictions impacting investors, it could be good news for owner occupiers as they should find less competition from investors.”