House prices are set to fall right around the country according to new data by the ratings agency Moody’s
Ben Fordham: Nine’s finance editor, Ross Greenwood, is here to break it all down for us.
Ross, take us through the findings…First of all what can we expect in Brisbane
Ross Greenwood: I’ll tell you what, it’s going to be interesting to see these, because this is quite a dramatic thing to say that house price is going to fall.
I should also make the observation to you, right at the outset, that Moody’s and Corelogic which made a similar forecast last year, got it completely and utterly wrong.
They underestimated the big price increase, particularly in Sydney and Melbourne…
Ben: But they’re only talking about one per cent, they’re saying across the board…
Ross: Okay, that’s true, but do bear in mind even price falls in individual suburbs are going to be significantly different, and if you’re on a suburb where there’s higher unemployment, then you’re going to find potentially the house price falls could be even greater.
But depending on where you live, if we say for example – go to Brisbane, over the course of next year could be one of the best places to be, because it suggested the prices will rise by 1.2 percent.
And in fact, it won’t see the big falls that will occur in both Melbourne and Sydney.
Ben: All right, let me ask you about Sydney, because I know you’ve got some figures there as well… so a drop, but not a not a not a steep drop?
Ross: Okay, not a steep drop.
Overall, on average, after an increase this year – so prices will rise this year – but next year they drop by 1.4 percent and then keep falling right the way until 2020.
Now, if we talking 0.6 percent here, half a percent there, you might sit in there and think ‘well okay, they’ve gone up so much, iron ore and property, I’m in pretty good shape’…
But as I say, just be wary of which suburb you’re in, because where there are areas where there’s underemployment or unemployment, they’re the areas where you could see bigger house price drops.
And in other areas it could be pretty flat – but what we’re seeing is a flattening out of the housing market according to this report.
So Melbourne prices, like Sydney, they have seen very steep rises you’ve seen increase this year, forecasts of around seven percent but then again they also fall until 2020 and next year the prices are expected to be off by 1.8 percent.
Other parts of the country are pretty good, Hobart one of the very best markets next year – expected to be up by 1.8 percent.
Canberra, by one percent.
And so you’ve also got Adelaide, up by half a percent and the big story here is at Perth prices – which have fallen off the back of iron ore prices coming down – are expected to be the very best market in Australia over the next two or three years.
You can see here, increased by 2.8 percent and they really do continue to rise right through until 2020 as a result of, not
only the cheaper affordability there, but also the fact of course you’re going to have better employment prospects as well…
Ben: It does come with a pretty big disclaimer, doesn’t it, as you pointed out that last time they made these projections – they were wrong…
Ross: That’s exactly it.
But there’s still the underlying warning here, that if you reach the affordability levels of everyday Australians and wages are not rising, that at some point the prices have to cool or come off and this is exactly what is being forecast.
If there’s a big spike in unemployment in Australia, for whatever reason, that’s the time when house prices come off in an even bigger hurry.
Ben: Good man, Ross – thank you.