PERTH

Overall, the Perth market is expected to remain weak for some time. The rising excess of dwellings and subdued economic conditions will keep prices in check. However, the market is expected to be close to the bottom and prices are forecast to stabilise in 2018. As mining investment bottoms out over 2018/19, so will the state economy and house prices.  

The strong mining related migration into Perth, both overseas and interstate, has generally been temporary in nature.

This boosted demand in the apartment market, rather than houses. As population growth has reversed, apartment rents and vacancy rates have also weakened causing the median apartment price to fall by 7.6% over the past three years to $402,200 at June 2017.

While the total market is in oversupply, both houses and apartments are forecast to experience minimal price growth.

ADELAIDE

Restrictions on investor lending have already started to affect investor demand in the state and as a result, the median apartment price is forecast to show a modest cumulative 3% increase between 2017 and 2020.

Price growth for houses is expected to be minimal at an average of 2% per annum in 2017/18 and 2018/19 before conditions start to improve by 2019/20. Overall, Adelaide’s median house price is forecast to grow 7% between 2017 and 2020.

(Sources: Residex; BISOxford Economics; QBE;SQM Research;CIR Research 2018)

GOLD COAST 

The Gold Coast market is typically more expensive than the metropolitan Brisbane market given the price premium on its desirable beach and inland waterway locations.

The Gold Coast also offers a lifestyle environment within commuting distance to Brisbane. Local economic conditions have been boosted by a number of infrastructure projects and related works associated with the 2018 Commonwealth Games, as well as the current upturn in residential building. The second phase of the Gold Coast Light Rail and the expansion Of The Star Gold Coast casino and Pacific Fair have created further employment drivers. The Gold Coast’s unemployment rate decreased from a high of 6% in December quarter 2014, to 5.3% in March quarter 2017. Prospects look sound.

Vacancy rates were low at just 1.7% at June 2017. The median house price in the Gold Coast has experienced strong growth of almost 7% per annum to reach $627,800 in the two years to June 2017. Growth in the median apartment price has risen by 4.1% per annum in the past two years to June 2017.

Apartment price growth has lagged as apartment completions have risen rapidly and take time to be absorbed.

Market sentiment is expected to remain very positive as local economic drivers keep employment strong. The Gold Coast median house price is forecast to rise a cumulative 6% to June 2020.

Apartment price growth is forecast to be similar.

CANBERRA

Often overlooked by investors, the Canberra house market has grown steadily over the past three years. The median house price rose 5.5% per annum over the period to  June 2017.

Underlying demand for dwellings has been largely supported by population growth.

The net interstate outflow has been shrinking over the past four years, and the net overseas migration inflow has also increased to an estimated 2,200 over 2016/17.

The Australian Capital Territory unemployment rate is tightening, indicating an improvement in local economic conditions. At March 2017, unemployment was 3.7% compared to 4.5% in December 2015. Improved demand has led to a tighter vacancy rate of 1.3% in June 2017.

Escalating new dwelling completions, spurred by low interest rates, first tipped the market into oversupply back in 2012/13. The market has remained in a small oversupply since then despite the increase in underlying demand over the past two years.  

With Federal Government employment being the key driver of economic growth, the outlook for Canberra will be closely linked with public sector employment growth.

Conditions in the house market are expected to remain largely positive, driven by population growth, an undersupply of houses and strong employment prospects. The median house  price in Canberra is forecast to increase a cumulative 16% between 2017 and 2020, the strongest growing market of all the cities over this period. 

Improving affordability and good rental yields for apartments may also attract investor activity and prices are forecast to see modest growth to 2020.