If you’ve followed the Melbourne property market for any length of time, you’ll be aware that trying to make accurate forecasts about future property price movements is not an occupation for the feint-hearted.
Indeed, we only have to look back to this time last year, (when most commentators were predicting that the 2016 property market would experience a slowdown), to see that these forecasts are often based on assumptions that can quickly become redundant. Having said that, I came across some forecasts last week that I thought were worth sharing, if only to let you know what some of the experts are saying.
I took a look at the metropolitan real estate growth forecasts for 2017 from three separate market analysts, Corelogic; BIS Shrapnel and SQM Research. In fact, the economists at SQM Research actually provided three forecasts, depending on whether interest rates went up, down or remained stable during the coming year.
After a year where Melbourne’s median property price rose so strongly, it was not surprising to see that each of the three analysts’ forecasts varied markedly. BIS Shrapnel provided the most conservative forecast, predicting that the Melbourne real estate market would rise by 4% to 5% in 2017. In contrast, Corelogic estimated that the rise would be closer to 9% this year.
SQM Research was even more bullish. Their Melbourne forecasts ranged from 8-13% if interest rates rose by 0.25% in 2017; 10-15% if rates remained stable; and a remarkable 12-17% if we saw a further cut of 0.25% to official interest rates by the middle of 2017!
One consensus that was clear in all three predictions was that Melbourne’s property market is expected to outperform the national average. On a national level, both SQM Research and Corelogic forecast that Melbourne real estate prices would rise at rates marginally behind Sydney, whilst BIS Shrapnel forecast that we would grow at a slightly faster rate than our northern neighbours.
Whilst the Canberra market was also tipped to continue growing strongly this year, the news for property owners in Perth was decidedly bleak with all three forecasters expecting prices in the West to fall this year.
From our perspective, we are currently experiencing a market where buyers are plentiful, but we’re yet to see a significant surge in property numbers. As long as stock levels remain at these unusually low levels, the pent-up demand from buyers seems likely to continue pushing prices higher. So it is difficult to see any slowdown in growth in the Melbourne market during the first half of 2017.
Whenever stock returns to more normal levels, particularly if we see an accompanying move upward in official interest rates, we are far more likely to see a slowing in price growth and potentially some negative price adjustments later in the year. However, in the short term it seems likely that the coming Autumn will follow in the footsteps of what we experienced in Spring last year… which is good news for most vendors. If you need any assistance or advice on making the most of it, be sure to give us a call.