Property price forecasts ‘good news’ for Wollongong

The property boom is over. Sydney house prices are set to flatten and unit prices to go down, while Wollongong prices will remain on the up, but in a more affordable manner, insurance giant QBE says.

As the Illawarra median house price surged to a 40 per cent increase in the last four years, QBE says it will slowly rise by an aggregate 8 per cent in the three years to June 2019, or just under 3 per cent each year.

QBE Lenders’ Mortgage Insurance chief executive officer Phil White said it was “good news” for Wollongong buyers as it signaled an end to crazy price rises and instead a healthy growth in line with inflation.

“When you have high volatility of house prices you end up with people speculating on making money rather than living in [a property],” Mr White said of Sydney. 

“Markets that are stable like Wollongong, and similarly with cities like Adelaide, you have a steady supply of housing, steady growth in population and that’s a lot better for housing affordability.”

Sydney house prices are tipped to remain flat in the period to June 2019, while units are forecast to fall 6.8 per cent cumulatively during the next three years. 

The unprecedented housing boom has been fuelled by the RBA's record-low interest rates, a growing population and a shortage of supply, locking young people seeking to buy homes out of the market.

The Illawarra in particular has also been driven by relative affordability compared to house prices in Sydney.

The big banks have tightened lending standards for property investors after pressure from regulators to avert a bubble, and some state governments have imposed stamp duty surcharges on overseas buyers.

QBE says investors have been on the decline in the past 12 months though first homebuyers remained constant and the number of people upgrading or downsizing was on a slight increase.

“The market is re-balancing back towards owner occupiers and if we’re not expecting to see dramatic increases in property prices then hopefully that will ease affordability," Mr White said.

The boom is also coming to an end in Melbourne and Perth, with the latter hit hardest with the median house price forecast to be 10 per cent below its 2014 peak in three years time. 

Brisbane home prices are seen bucking the trend, with QBE saying a lack of new supply will push prices up 6.5 per cent.

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