Low Supply Set To Push Up Prices

Posted on 15/09/2019  
Low Supply Set To Push Up Prices

Leading mortgage insurer QBE has forecast price rises as high as 20% in our major cities, boosted by reduced supply at a time of rising demand.

In its Australian Housing Outlook 2019-2022 report, QBE predicts house price growth across all capital cities.

Brisbane is set to experience the sharpest rise in house prices (20%) over the three years to 2022, followed by Adelaide (13%), Darwin (7%), Canberra (6%), Perth (6%), Sydney (6%), Melbourne (5%) and Hobart (4%).

Unit price growth has also been projected in all capital cities except Sydney, where unit prices are expected to drop marginally over three years.

Unit values are projected to rise the most in Darwin (9%), followed by Canberra (7%), Perth (5%), Adelaide (5%), Melbourne (4%), Brisbane (3%) and Hobart (3%).

QBE Lenders’ Mortgage Insurance CEO Phil White says the growth will come in response to a supply and demand “imbalance”.  

“As well as lower interest rates, government incentives and an easing of lending restrictions, our report suggests that a drop-off in construction completions is likely to drive prices higher over the next few years,” he says.

“Building approvals fell 19% in 2018-19 and completions are forecast to fall to 163,500 dwellings by 2020-21 - down 22% from the average over the past five years.

“With population growth expected to remain strong, that’s well below underlying demand. This could mean some previously oversupplied markets will tip back into undersupply by 2021-22.”

White says a “discrepancy” between current demand for housing and the timing of future supply of units will also result in “greater volatility and upward pressure on property prices”.

“Given these factors, the report’s forecasts for the Sydney market may be on the conservative side and we would expect that pockets of this market could see sharper price increases sooner,” he says.

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