The federal election, international borders reopening and affordability will have the biggest impact on house prices as developers look to new locations for construction.
The future of house and apartment price growth is heavily reliant on a number of factors but the “time to buy a dwelling” has already slowed.
Housing demand fever started in November 2020 and has now fallen 34 per cent from its peak, according to the Westpac-Melbourne Institute’s latest institute of consumer sentiment.
Corelogic data showed dwelling prices built momentum in 2020, up only 3 per cent, before the urge to buy sent prices soaring up 22.1 per cent last year.
However, the exceptional growth will not last forever, according to Corelogic’s Eliza Owen who will speak at The Urban Developer’s upcoming Property and Economic Outlook vSummit.
“That might see us going from a 22 per cent growth rate [for houses] over the year to a growth rate that looks more like 6.5 per cent,” Owen said.
“The apartment market might see a bit more demand off the back of affordability constraints in the house segment.
“But, looking at house and unit cycles historically, units have never really outperformed detached houses on a long-term basis.”
▲ Urban sprawl in cities such as Brisbane is relatively small compared to places with multiple CBDs, leading to new opportunities for developers.
Factors inducing a downturn
The Corelogic head of Australian research said any factors influencing a downturn in the housing market would impact apartments as well.
“So anything that constrains the flow of credit, tied to lending conditions, higher mortgage rates, more stocks coming online in terms of listings and new builds being completed,” Owen said.
“It seems increasingly likely economic performance is feeding the RBA forecast of inflation and unemployment.
“If the economy is recovering more quickly than expected, it seems logical that increasing the cash rate would be expected as well.”
However, with a federal election looming, a rate rise would likely happen later in 2022 with politicians expected to address housing as part of their campaigns.
“We could see a lot of focus on housing affordability as well which could continue to create policies around incentives for first home buyers which could create an additional boost to market conditions,” Owen said.
Opportunities on the periphery
The status of international borders would have the biggest impact on Sydney and Melbourne however there were still opportunities abound in smaller cities.
Owen said developers were already taking advantage of lifestyle markets and the change in dwelling demand but the availability of new homes in these areas was still sparse.
“From an interstate affordability perspective, areas like Adelaide, Brisbane and Hobart present really good opportunities,” Owen said.
“There’s various opportunities for the periphery of the metropolitan region, where people coming from Sydney or Melbourne might see the opportunity in a detached house 30km from the Brisbane CBD instead of 50km from Sydney.”
Article Source: www.theurbandeveloper.com
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