HSBC forecasts national house price growth slowdown

HSBC’s leading economist Paul Bloxham has been reported as predicting the national house price growth to fall to 2-5% over 2017, from the 2016 average of 7%.

In a recent note he is reported to have made the following prediction of house prices:

Melbourne

We expect housing price growth of 2% to 4%, supported by growth in detached house prices (5% to 6%) as solid demand is met by only limited supply. In contrast, we expect the oversupply in the apartment market, particularly in the inner city, is likely to start showing through in price falls (-6% to -2%).

Brisbane

We expect oversupply to weigh on apartment prices (-4% to 0%), but we see a limited effect on the detached house market, partly due to the lack of substitutability. A key difference for the Brisbane market, when compared with Melbourne, is that housing price growth has been far more limited than in Melbourne, which could limit the scope for significant price falls.

Perth

The end of the mining boom has weighed on Perth’s housing market, driving housing price falls in 2016, which we expect to continue in 2017 Part of the adjustment is coming through slower population growth, as people move to the eastern states. Weaker population growth is also expected to continue to weigh on the Perth housing market in 2017.

Adelaide

This housing market is dominated by detached dwellings. The South Australian economy is expected to continue to have only modest growth, keeping housing price growth contained.

 

Mr Bloxham doesn’t agree with claims of a coming correction or crash, citing the banks’ decision to tighten lending restrictions and the decline of foreign investment as significant factors slowing the market. He instead expects the market to gradually cool over the coming years.

Sources:

Business Insider Australia – HSBC says Australian house price growth will cool in 2017, but without a correction or crash

Property Observer – Low single-digit rates of housing price growth in 2017 for Sydney, Melbourne: HSBC’s Paul Bloxham

 

Written: 29 November 2016, Updated: 15 January 2020

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