2018 marked the worst year for the Australian housing market since the global financial crisis ten years ago.
Sydney and Melbourne house prices fell by -8.9 per cent and -7 per cent respectively while Hobart, Canberra and Adelaide properties conversely rose in value.
But what’s in store for the year ahead? According to analysis by Moody’s Analytics, the gloomy outlook doesn’t look set to get much brighter – but there are pockets of opportunities in some cities.
Moody’s Analytics measures house values in capital cities using using CoreLogic’s Hedonic Home Value Index, which accounts for factors such as the number of bedrooms and bathrooms, land area, and geographic context of the property.
Here’s a breakdown of how the housing markets of each of Australia’s capital cities might fare in 2019:
Property prices in Sydney fell by 8.9 per cent according to CoreLogic figures, and it’s still downhill from here going into 2019.
“A further 3.3 per cent drop is forecast for 2019,” said Moody’s Analytics economist Katrina Ell. “The city is Australia’s largest housing market.”
“By 2020, the correction is forecast to have largely passed, but house value growth will be far from the lofty gains of recent years. Housing values are forecast to rise modestly in 2020.”
It’s bad news for the ‘Europe of Australia’: Moody’s forecasts a further drop of 6 per cent in 2019.
“With lending conditions likely to remain tight in 2019, the downturn in home values in Greater Melbourne is expected to intensify before rising modestly in 2020,” Ell said.
“The largest declines are forecast in Melbourne-Inner East and Inner South, where home values are projected to fall by more than 10%.”
While property values will vary across Brisbane, house prices are generally forecast to rise by “a mild 1.2 per cent in 2019”. West Brisbane and Inner Brisbane have been earmarked as key strength areas, “offsetting” drops in South Brisbane.
“The outlook for these housing markets is for either flat or mildly positive returns over the forecast period.”
Western Australia’s ‘weak’ housing market is set to cool further, with house values in Perth likely to decline 2.8 per cent in 2019.
But a recovery is on the horizon in 2020 “thanks to population growth,” Ell observed.
Property investors in the ‘City of Churches’ can expect house prices to rise 2.6 per cent this year, but shouldn’t expect too much.
“Slow population and income growth will weigh on the South Australian housing market.
“Values are forecast to pick up slightly in 2019 and 2020, although growth is unlikely to accelerate meaningfully.”
Tasmania has enjoyed “a period of sustained housing market growth”, but this is expected to slow down by 2.7 per cent this year and then a further 2 per cent in 2020.
“The expected deceleration in the housing market in Hobart in 2019 stems from a lack of job growth, which will keep unemployment elevated after a period of improvement.
“This is contributing to relatively low wage gains, which will strain household balance sheets
as house values rise.”
The Bush Capital could become the apple of the eye for Aussie property investors: ACT house values are set to rise 6.1 per cent in 2019 after a 5.5 per cent rise this year.
Ell attributes strong population growth as propelling both the ACT economy as well as the “resilience of the ACT housing market”.
“The ACT’s population grew by 2.2 per cent in the year ended 2017, the biggest rise since 2012, driven by record net overseas migration.”
Darwin’s housing market has been declining since 2014-2015 – but this has had the effect of improving housing affordability in this capital city and attracting first-home buyers.
Property prices fell 2 per cent in 2018 after a drop of 5 per cent in 2017, but will rise 3.7 per cent in 2019 and a further 6.6 per cent in 2020.
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