Inner-city property prices set to tumble

Property may be the hottest investment game in town, but a leading Australian economist has warned it is about to become a poor investment.

Deloitte Access Economics has forecast that over-supplied inner-city apartment markets in Melbourne and Brisbane will fall by as much as 15 per cent in value by 2019.

"Booming house prices do help an economy as they occur," said Chris Richardson from Deloitte Access Economics.

"Eventually, though, they start to hurt."

Key points:

• Inner-city Melbourne and Brisbane apartments may fall by as much as 15pc, economist says
• Some buyers getting into the market now may be hurt by the drop
• Property Council says there is an under-supply in capital cities and construction will help bring the market back

Inner-city property prices set to tumble, says leading economist

 

Nothing unusual for the Brisbane market, a bit less likely ie not uniform across the Melbourne market

 

Houses aren't apartments

 

Yeah I agree, a lot of these article seem to infer that apartments and houses are inter-changeable and on the same supply/demand curves.

There will be some correlation of course, but I imagine just because apartments are oversupplied doesn't mean its doom for houses.

 

the 80% lvr restrictions apply to both units and houses and cover most inner sydney suburbs.

 

In the inner cbd: for oversupplied apts- yes. For other asset types, no, quite the opposite.
Nothing new- this also happened in sy/mel 5 years ago. Will happen soon in brisbane. Already has started to some degree, but will accelerate.

 

And over priced houses - yes

 

I was thinking that it has to effect house prices as well. If developers are working off how many apartments/units/townhouses they can build on a site then it has to drop land prices even further out from cbd. If you could get say 20 apartments onto one block and they drop by 15% each, then that effects the price on what the initial price one would pay for the development site. This would easily trickle further out to suburbs. Anyhow that's my thought process.

 

5 years ago, there was a huge pipeline of apartments in Melbourne - did it affect Melbourne house and townhouse prices non cbd? No...they increased- and still are despite even more apt stock.
Brisbane will not be any different.

 

Five years ago we didn't have aphra changes and foreign buyer taxes and clampdown on foreign lending.

The ecoNomy was also in a pretty sweet spot with commodities rising to all time highs.

It is unlikely that unit stock coming onto the market was as much as now, mostly thanks to Matthew guy lol...

The rental market for houses in Brisbane is already under pressure . House prices are also starting to come down QoQ. Once prices start going down, the deleveraging will snowball as investors rush for the exit.

Look at perth, they are also having a glut of apartment completions this year no??

 

apra changes will dampen some investor confidence, but not enough to warrant a widespread fall. Such articles may be misleading if they broadbrush all cities and asset types and just call it ' inner city property prices set to tumble'. Maybe the article is referring to oversupplied apts, in which case probably so, but not for all other inner city property.
The demand drivers for brisbane house especially and most inner and mid ring ex oversupplied far exceed things like apra changes which danmpen investor demand- in brisbane cbd and surrounds, as well as sydney and melbourne.

 

Yes, pretty much.

 

A lot of these oversupply articles concentrate solely on approval numbers with no other factors taken into account such as immigration... The difference between approvals and actual completions can be significant. Eg in NSW 40,000 were approved but now will not commence



There's 12,000 completions expected for Brisbane in the next 2 years but with about 11,000 people moving there in that time, it may not be as bad as expected;

How many people are moving to Brisbane & where are they going? - Property Update

 

11000 people living in those 12000 completions?
unless every completion is a one bedder thats definitely a glut coming up..

if we take an average of 2 people per completion, we'd still have double the number of completions compared to population increase.

So it will probably be as bad as expected.