Apartment prices in Australian cities, except in Adelaide, Canberra and Hobart, will decline by 2020, according to a QBE report.
The Australian Housing Outlook 2017-20 report showed that Sydney and Darwin’s residential markets would be the weakest, with prices declines in houses and apartments.
The report cited oversupply as the primary reason for the projected weakness in the apartment market. Buyers may stand to gain from the expected drop in prices, although it remains to be seen if values will be favourably low in the next three years.
Still, strata maintenance in Sydney will be necessary in case apartment prices are set to rebound at any time. Apartments in the city will fall 3.8%, while those in Brisbane are set to fall even lower at 7.2%. Phil White, QBE Lenders’ Mortgage Insurance chief executive, said that the silver lining of the expected price drop involves more affordable housing. Aside from apartments, home prices in some areas in Sydney have also declined in the past six months.
Median prices for homes in Haberfield and St Peters have declined by 17.2% and 9.2%, respectively, due to the WestConnex project. The integrated transport plan has elicited a mixed impact on home prices, which usually increase at the prospect of being close to more transportation infrastructure.
It’s understandable why prices in Haberfield and St Peters have fallen, as major construction activity turns off most buyers. On the contrary, home prices in Ashfield and Croydon Park have increased 19.2% and 18.3% over the last six months.
The expected price drop in apartments in almost all capital cities may be discouraging for property developers, yet it bodes well for those that still wish to have their own home.