The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
FULL PROGRAM RELEASED FOR URBANITY-25 CONNECTING PROPERTY LEADERS ACROSS THE ASIA PACIFIC
FULL PROGRAM RELEASED FOR URBANITY-25 WHERE THE PROPERTY INDUSTRY CONNECTS
VIEW FULL AGENDADETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
Real EstateAna NarvaezThu 18 Oct 18

Sydney and Melbourne House Prices Will Fall 20%: AMP

TUD+ MEMBER CONTENT
24b3bd9c-aa55-4bf8-9111-c4dc6b4912b3
SHARE
26
print
Print

Property prices in Sydney and Melbourne will see a top to bottom fall of 20 per cent, with AMP Capital cutting its forecasts for the two cities and predicting further price falls.

In an update to the market on Thursday, AMP Capital chief economist Shane Oliver said that he now expects more price falls – downgraded from the initial 15 per cent fall Oliver forecast in August – and recommended property investors focus on higher yielding markets.

“For some time, we have been expecting top to bottom falls in Sydney and Melbourne prices of 15 per cent spread out to 2020, implying price declines around 5 per cent per annum,” Oliver said.

“However, the risks are starting to skew to the downside – particularly around tighter credit and falling capital growth expectations made worse by fears of a change in tax arrangements.”

Oliver said he now expects a 20 per cent decline in Sydney and Melbourne house prices, spread out to 2020 – taking prices back to first half of 2015 levels.

Related: Property Market Confidence ‘Collapsing’: Survey


Blaming credit conditions, an increase in supply and the “negative feedback loop from falling prices”, Oliver pointed to auction clearance levels of 7-8 per cent roughly consistent with price declines.

Corelogic clearance rate data – released the same day as AMP’s market outlook – reveals an auction clearance rate of 47 per cent, compared with 67.1 per cent a year ago.

Australian capital city home prices have declined for 12 months in a row and are 4 per cent from their peak. Annual price falls in Sydney reached 6.3 per cent, while Melbourne declined 4 per cent.

AMP Capital economist Shane Oliver says property investors should remain wary of Sydney and Melbourne for now and focus on higher yielding markets.


House price crash ‘a risk but remains unlikely’

Oliver said the turning tide against property prices reflect a “perfect storm” of factors including poor affordability, credit curbs, rising supply, reduced sentiment and a fall in foreign buyers.

Reminding readers that the threat of a property crash has been “wheeled out endlessly over the last 15 years or so”, Oliver said that a crash (which he defined as a 20 per cent or more fall in national average prices) is unlikely.

“Our assessment remains that a crash is unlikely [unless] we see much higher interest rates or unemployment (neither of which are expected) or a continuation of recent high construction for several years (which is unlikely as approvals are falling) and a collapse in immigration.”

Meanwhile, house prices in Perth and Darwin are bottoming out, and prices in Adelaide, Brisbane, Canberra and Hobart – along with regional centres – are likely to perform better despite still seeing some impact from tighter credit.

“Overall, we now expect national average prices to fall nearly 10 per cent out to 2020 which is a downgrade from our previous expectation for a 5 per cent national average fall,” Oliver said.

ResidentialSydneyMelbourneConstructionFinancePolicySector
AUTHOR
Ana Narvaez
The Urban Developer - Editorial Director
More articles by this author
ADVERTISEMENT
TOP STORIES
Qld Budget 2025-26 Brisbane City
Exclusive

Billions Promised, Now Deliver: Industry’s Qld Budget Verdict

Vanessa Croll
6 Min
Medium Density housing in NSW
Exclusive

NSW Budget ‘Groundbreaking’ $1bn Guarantee to Unlock Housing

Leon Della Bosca
7 Min
Exclusive

Azure’s Trent Keirnan on Playing the Long Game

Taryn Paris
5 Min
Exclusive

Private Credit Surge, Skittish Buyers Force Banks to Loosen Presale Rules

Taryn Paris
5 Min
Forme's James Place on James Street, Fortitude Valley Brisbane
Exclusive

Forme Pushes the Boundaries on James Street Precinct

Renee McKeown
4 Min
View All >
Residential

Verso Expands Ripley Town Centre Retail and Homes Plan

Taryn Paris
Ausgrid battery storage proposal
Infrastructure

Ausgrid’s $423m Battery Play Hits the Grid

Vanessa Croll
SA Modular home example
Other

SA Tests Modular Homes to Solve Regional Housing

Leon Della Bosca
South Australia launches $2.15-million modular housing trial to address regional worker accommodation shortages this yea…
LATEST
Residential

Verso Expands Ripley Town Centre Retail and Homes Plan

Taryn Paris
3 Min
Ausgrid battery storage proposal
Infrastructure

Ausgrid’s $423m Battery Play Hits the Grid

Vanessa Croll
3 Min
SA Modular home example
Other

SA Tests Modular Homes to Solve Regional Housing

Leon Della Bosca
3 Min
Qld Budget 2025-26 Brisbane City
Exclusive

Billions Promised, Now Deliver: Industry’s Qld Budget Verdict

Vanessa Croll
6 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/amp-reckons-sydney-and-melbourne-house-prices-will-fall-20