Housing slump to continue

SYDNEY: Fallout from the banking royal commission and tightening lending regulations will extend the housing market slowdown in Melbourne and Sydney over the next three years, but Brisbane and Adelaide are primed for growth.

The median house price in the Victorian and New South Wales capitals — the country’s two largest property markets — is forecast to fall 2.5% and 1.2% respectively by June 2021, while the data released by QBE Insurance on Thursday predicts the value of units to fall 2.1% in Melbourne, and 3.1% in Sydney.

Houses in all other capital cities are forecast to increase in value, with the strongest growth expected in Adelaide and Brisbane, which are tipped to climb 12.4% and 11.3% respectively.

But QBE Lenders’ Mortgage Insurance chief executive Paul White predicted a widespread downturn in fortunes for apartment owners, driven by weaker demand from investors and an increased supply of units.

‘‘We anticipate foreign investment will further dampen in coming years owing to a number of factors such as increased approval fees, stamp duty and land tax surcharges,’’ Mr White said.

The gloomy projections for Australia’s two largest cities is a snap back to reality following extreme growth between 2012 and 2017.

Sydney house prices soared 84% over the period before falling 7.6% in 2018. — AAP