Property prices in Sydney and Melbourne are set for a modest fall next year, driven by increasing unaffordability and forced sales.
SQM Research’s annual Housing Boom and Bust report found that nationally, the forecast was for the national average house price to drop by one to three per cent.
Perth and Brisbane are the only cities expected to record price rises, driven by strong Chinese demand for base commodities such as iron ore.
However, for much of the rest of Australia, the sharp deterioration of housing affordability, driven by ongoing interest rate rises which SQM labelled “restrictive”, plus an anticipated slower economy, will see a modest to moderate correction in dwelling prices take place in Sydney, Melbourne, Canberra and Hobart.
Adelaide and Darwin are anticipated to remain steady.
Sydney could record a drop of four per cent, though that won’t be citywide.
Properties in wealthier suburbs and the inner city are likely to stay as high, driven by demand from overseas.
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Melbourne will record a fall of up to three per cent, while Canberra is expected to see house prices drop by four to eight per cent.
“Another year of anticipated strong population expansion (albeit slower than 2023) plus an ongoing shortage of new dwellings, will limit the fall in housing prices to single percentage digits,” SQM managing director Louis Christopher said.
Homeowners hold onto properties the longest in these ten suburbs
“Nevertheless, with expected slowing employment growth and the corresponding rise in unemployment, tipped to be towards five per cent by the year end 2024, this negative will more than offset another year of strong migration.”
Christopher said interest rates would also keep biting next year.
“Distressed selling activity is expected to jump, especially in NSW where we are already starting to see a new trend upwards in that data set.,” he said.
