BIS Shrapnel recently released a report that indicates that median Australian house prices may slow from the 2014-15 growth rate of 22.3% down to a forecast 7.3% in 2015-16, and also speculates that growth is anticipated to slow even further throughout 2016-17, with a pricing slump of around 2.7% predicted.
The decline in property growth is attributed to the bank's tightened lending policies over the last few months that were designed to reign in investor borrowing. Investor mortgage interest rates were increased, which changes the growth figures within the property market.
A factor potentially slowing housing growth in Sydney is the restriction on borrowing capacity for investors. Higher interest rates also translates to a decrease in available borrowing capacity, which could hinder the purchasing plans of a large number of Australian investors over the coming years. Many investors also now face higher mortgage interest payments on mortgages held over their investment properties. It's likely that many landlords will seek better yields to compensate for the additional repayments, which could result in driving up the amount of rent charged to tenants.
Good News for Brisbane Homeowners
By comparison, the Brisbane housing market is predicted to buck the trend and continue a pattern of strong growth throughout 2015-16 and on into 2017. Forecasts show that house prices in Brisbane are estimated to grow approximately 13.2% throughout the next 12 months. However, the report indicates that unit and apartment prices in Brisbane are only predicted to grow by an estimated 2.3% over the same period of time.
Low or Stagnant Growth for the Rest of the Country
The report goes on to show that capital cities across the rest of the country face a period of stagnation in terms of pricing growth, while still others could expect to see property prices falling in the coming months.
Melbourne's house values are anticipated to rise by around 2.8% throughout 2015-16, but unit prices are expected to decline by around 4.9%, which could drag the overall growth figures down for the city.
Adelaide's property market is forecast to see almost no movement at all, with a small 0.8% house pricing growth expected in 2015-16. Perth and Darwin are set for falling property prices over the next few years, with both cities predicted to see a decline of around 2.4% to 2.5% in house prices.
Hobart and Canberra may also see small house price increases, but unit prices are also estimated to fall.
It's impossible to know exactly what will happen in the housing market over the coming years, unless you have a crystal ball that is. However, the property market is by nature cyclical, and this can make it easier to try and predict what could potentially happen over the coming years.