Good news for Australian homeowners

Low interest rates and population growth will lead to a slow growth in housing prices.

Good news for homeowners

According to economists from investment bank UBS, low interest rates and population growth will lead to a slow growth in housing prices, rather than a drop or a crash.

This is good news for homeowners, as it means the predicted ‘top’ in April this year may no longer apply.

UBS noted a drop in dwelling unit commencements (19 per cent) and building approvals (20 per cent in May) and a sharp fall in approvals for high-rise units.

Annual building commencements will fall from about 202,000 to 195,000 next year and 188,000 in 2018.

This slowdown in the apartment sector and housing construction in general should mean that the value of existing dwellings will rise slowly rather than fall. 

Deloitte Access Economics has backed the UBS economists noting that a slower pace of home building could lead to a potential economic headwind.

"The pace of home building is set to shrink further amid increasing evidence that gravity may soon start to catch up with stupidity in housing markets," said the Deloitte Access report.

What do you think? Is the housing market going to continue to rise? How would a housing crash affect you?



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    18th Jul 2017
    The property boom end about 1925.
    18th Jul 2017
    An estate agent I was talking to said that the housing market [Sunshine Coast] has been on a plateau for a while and she reckons the prices will go down.

    18th Jul 2017
    What! Prices of homes in Sydney are governed by availability. Whenever there is a shortage of something, the price rises. Am I misreading this article which is saying that less homes will be built, therefore prices will fall. I have no formal qualifications in this area so obviously I have missed an important item in the article. Or I am right.
    18th Jul 2017
    you were misreading it, the opposite is the case. Slowing construction will enhance prices of existing dwellings as the supply dwindles.
    18th Jul 2017
    Thanks Franky, do you want the name of a useless speed reading course?
    18th Jul 2017
    I doubt there will be a 'crash' especially if new builds are slowed or stopped. The growth in prices may slow down but as long as there are more people who want to buy than there are available residences prices are unlikely to plummet. I would suggest those at most risk would be those paying over the odds for an off-the-plan dwelling that has yet to be built. They may not get the return they had hoped for.
    18th Jul 2017
    Prices of units will fall 15-20% in the next three years.
    You only have to drive around Sydney environs to see that there is a glut about to hit the market in the next few years.
    Casual workers , part timers and certainly refugees cant afford them and they are mostly of poor build quality from what I've discovered on my downsizing searches.
    Hang out for future bargains when it hits the fan.
    18th Jul 2017
    That would suit me. Even better if they came back enough to lower rates and insurances.

    18th Jul 2017
    So that other article about pensioners and rent was all rubbish
    Told you
    19th Jul 2017
    Like any market if people lose confidence in it it will crash and take years to recover. Smart people will buy the bargains as those who need to sell sell but most will be too scared to buy. Then you have a period of years as no one wants to sell holds on waiting for buyers to come back into the market. Slowly it will build back up into another boom like we see today.

    Markets climb a wall of worry and busts take the elevator back down. We are not far off that elevator road now.

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