Australian Housing Market to Slow in 2016

Australian Real Estate Forecast

Bit of a follow up to my previous post regarding if Brisbane is to perform as well as Sydney/Melbourne have previously. SQM Research have released a recent article indicating that Housing Market to slow in 2016, with Melbourne to outperform.

Australian dwelling prices are forecasted to rise in 2016 at the slowest pace recorded since 2012. SQM’s release today of its 2016 Housing Boom and Bust Report, forecasts that average capital city dwelling prices will rise between 3% and 8% for the full calendar year. This is down from the current 9.8% recorded for the 12 months to June 2015. The slowdown will occur predominantly as a result of a slowing Sydney property market, which is forecasted to rise between 4% and 9%. Melbourne is forecasted to overtake Sydney and be the best outperforming capital city in 2016 with a forecast rise in dwelling prices of between 8% to 13%.

A lot of commentators have indicated an oversupply in Melbourne's real estate, however this is primarily within the CBD and inner suburbs for apartment supply. Commentators such as Michael Yardley have indicated investors should look to southern and eastern suburbs of Melbourne for established apartments where capital growth can be manufactured through renovating.

The table seems to correlate well with the current population growth, with Victoria and New South Wales currently experiencing population growth greater than five years ago. Considering my bias so far to looking at the Brisbane market, these numbers do seem interesting for future investments especially with Brisbane's underperformance of recent years when compared to the other east coast real estate markets.

Australian Population Growth

As noted by Michael Matsuik the Australian population growth is down as shown below.

The distribution of population growth is what is concerning for Brisbane and Queensland as a whole with growth five years ago exceeding current growth.

When looking at the growth in detail by capital cities, it is clear that Brisbane is an under performer on the east coast.

Brisbane Development

With all this talk about Brisbane becoming the next "boom market", the population growth forecasts don't make for promising prospects. In some aspects of Brisbane such as West End and Newstead developers have been hitting the ground running and building substantial amounts of new high rise apartments increasing the amount of supply in those markets. The BrisbaneDevelopment.com website shows a great map of Brisbane and proposed/current/completed major developments around the city.