House prices will fall 5 per cent in Sydney and Melbourne over the next year as credit curbs hold back investors and owner-occupiers take longer to get approval for finance, Stockland chief executive Mark Steinert said.
The declines, triggered by weaker performance at the top end of the market, would be greatest in the country’s two largest cities while Brisbane would keep growing, Mr Steinert said on a panel at the Property Council of Australia’s annual Property Congress event last week in Darwin.
“Sydney and Melbourne at the higher end is where most of the vulnerability is,” he said.
“You can actually see the affordable product has been up in the last 12 months, but … I think in Sydney you’re probably talking about another 5 per cent or so down, Melbourne probably similar, Brisbane is still growing, and Perth at some point will grow after having been flat to down for five years post the mining boom.”
Speaking alongside Mirvac chief executive Susan Lloyd-Hurwitz, GPT chief financial officer Anastasia Clarke, Cbus Property chief executive Adrian Pozzo and Vicinity Centres chief executive Grant Kelley, Mr Steinert, and his colleagues painted an upbeat picture of the housing market that research group Oxford Economics last week described as one of the four riskiest markets in the world
Ms Lloyd-Hurwitz agreed that the modest decline would be concentrated in the higher-priced segment of the market for detached houses.
“It’s concentrated at the top 25 per cent of houses, not the middle 50 per cent of houses or apartments, and so you really can’t talk about even a Sydney market or a Melbourne market,” she said.
“I think 5 per cent is a decent number.”
The latest CoreLogic figures show that in the year to August, detached house prices fell 7.1 per cent in Sydney, a steeper decline than the 2.2 per cent fall of apartments. In Melbourne, houses fell 2.7 per cent while units gained 1.5 per cent.
Ms Clarke welcomed the likely decline across the country as a whole.
“I don’t think it’s a bad thing,” she said. “It just takes that pressure out of the balloon, and I think it’s one of those conditions that if we can modestly shrink a little, deflate a little, it will help Australia continue that 28 years and more of growth, and not get beyond itself where a bigger correction would be required.”
Mr Pozzo and Mr Kelley said Brisbane offered the best prospects for growth over the coming year. Mr Pozzo, whose company is building the mixed-use ‘Pantscraper’ tower with 202 luxury apartments, a hotel and office accommodation on Melbourne’s Collins Street, said the lack of apartments in the Brisbane CBD – in contrast to areas that have already seen a lot of new supply such as Newstead and South Brisbane – made that an attractive area for possible investment.
He said he would be open to buying sites in the Brisbane CBD.
“If someone would sell them to me, I’d buy them, yes, of course, at an appropriate price,” he said.
Mr Kelley said Brisbane benefited from having a market of both international and domestic buyers.