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It's hard to go a day without hearing talk of the Australian property market, especially in our biggest cities, Sydney and Melbourne. It's been a tumultuous few years and prices across the nation have climbed to a level that's causing serious concern among home buyers and investors.
Are we finally reaching the top of the crest, and are prices going to start to level out? House price data from the Australian Bureau of Statistics (ABS) released on September 19 reveals recent trends of the Australian housing market and can help us better understand what's to come.
Are we finally reaching the top of the crest and, are prices going to start to level out?
Sydney
Sydney saw an average property price increase of just 2.3 per cent over the June quarter. That number was slightly higher at 2.8 per cent over the June quarter in 2016, indicating that the Sydney market is indeed starting to gradually slow down.
Other signs suggest the same thing, such as auction clearance rates, which have consistently dipped below 70 per cent in the city. The last result, reported by CoreLogic RP Data, shows Sydney's clearance rate at just 68 per cent.
QBE's Housing Outlook Report supposes that the effects of this slowdown will come into effect next year, forecasting a 0.9 per cent drop in Sydney house prices over 2018.
Melbourne
Melbourne's housing market has often been one step behind Sydney's in terms of price growth but it appears the tables have turned. ABS data shows Melbourne's average house price grew by 3 per cent - 0.7 percentage points more than Sydney's - over the June Quarter this year.
This actually shows a slight increase in the rate of price growth over the same period last year. Melbourne's auction clearance rates have also remained high, often over 75 per cent, indicating that there's still plenty of demand relative to supply in the city.
Despite this, QBE forecasts that house prices in Melbourne will actually drop by more than Sydney's - by 1.8 per cent over 2018.
Melbourne's average house price grew by 3 per cent - 0.7 percentage points more than Sydney's - over the June Quarter this year.
Brisbane
Over the last several years Brisbane house price increases have been slow but steady. ABS data shows the average price here increased by just 0.6 per cent over the June quarter, and 3 per cent over the 12 months prior to June.
In the future, forecasts show that this trend could reverse. In fact, the Housing Outlook report estimates that Brisbane's average house price will in fact increase by 1.9 per cent over the course of 2018.
Such forecasts can be useful to gain an understanding of what may happen in the future. However, it's important to note that due to the dynamic nature of a city's housing market their predictions may not eventuate.
Adelaide
Similar to Brisbane, Adelaide has seen a slow burning housing market over the last few years. Annual average price increases have sat at about 5 per cent, and the average price rose by just 0.8 per cent over the June Quarter, ABS data shows. Even that moderate growth may be coming to an end, with CoreLogic's monthly indices showing that prices have stagnated over the last month.
Adelaide has never had a rock star housing market, however, the SA government's data shows the median price here is an affordable $452,000. While that may not have investors excited, it's positive for the city's first home buyers and lower income families who can better afford a home here.
Forecasts suggest the market will turn down in 2018, with average prices decreasing by 2.2 per cent. However, this appears to be a short term decline with house prices forecasted to remain relatively still over 2019 and into 2020.
Similar to Brisbane, Adelaide has seen a slow burning housing market over the last few years.
Australia's housing market
As we approach 2018, we have a grand total of 9.9 million residential dwellings in Australia, according to ABS statistics. That's roughly one home for every 2.4 members of our population. The median price in our country is climbing higher, no doubt buoyed by the Sydney and Melbourne markets, to sit at $679,1000 - a number that many would deem unaffordable.
However, it appears that recent price trends may be slowing and returning to a more reasonable pace. If current trends continue and house prices gradually moderate, we may find house prices slowly becoming more affordable for all in the long run (even in Sydney and Melbourne).
This may not be music to the ears of property investors, but it's a move towards a more sustainable future, a healthy housing market and a more equitable Australia.
