Property market to hit the brakes in 2016 

Date
    January 14, 2016
    Sydney Morning Herald

Australian's golden run of property price growth will end "sharply" this year, predicts global credit agency Fitch Ratings.   

In a new report, Fitch predicts that a combination of low affordability, exposure to US rate hikes, and prudential regulations will add up to a much slower rate of growth in a number of Asia-Pacific countries including Australia.

"The pace of house-price growth should decelerate particularly sharply in Australia and New Zealand this year; while the decrease should continue in Singapore, with prices dropping by a further 5 per cent from last year," it says.


Fitch predicts the markets will remain relatively stable due to low interest rates.

Fitch forecasts growth will clock in at about 2 per cent in Australia in the coming year about half that likely across the ditch in New Zealand.

For Australian capital cities that is well down on the 8 per cent average annual growth enjoyed over in the last three years, according to CoreLogic RP data.

"Stretched affordability and further compression of rental yields are likely to be key factors driving down price growth in Australia," Fitch says in a media statement.


The Australian property market is in for a quiet year.

"This is especially the case in Sydney and Melbourne, where price appreciation in recent years has outpaced wage growth - leading to decreasing levels of affordability.

Weaker demand from investors has also already begun to affect mortgage demand, as falling rental yields and new prudential measures restrict the growth of investment loan portfolios."

Despite the slowdown Fitch predicts the markets will remain relatively stable due to low interest rates and steady mortgage performance.


Weaker demand from investors has also already begun to affect mortgage demand.

"Steady Australian performance reflects increasing levels of servicing buffer from lower interest rates, a stable unemployment rate, and price appreciation opening up additional equity for borrowers," Fitch's report says.

"Low wage growth and rising living costs would mean performance coming under pressure if rates rise, but this is unlikely in 2016."

Fitch also notes that low interest rates and solid employment may also weaken attempts by regulators to cool the market.

Although it does predict that investors will be less of a force.

"Fitch expects weaker demand from investors as a result of a further compression in rental yields, increased costs - a result of prudential measures restricting the growth of investment loan portfolios - dwindling prospects for capital growth in the capital cities, and increasing transactional costs," it says.

of course, they predicted the same in 2015,2014,2013,2012,2011,2010,2009,2008,2007,2006,2005,2004,2003,2002,2001,2000

meanwhile, in the real world .... with the stock market going into freefall, the property market is about to get another boost

John Smith wrote on Jan 14^th, 2016 at 10:43pm:



exactly... weve been hearing it for years and years...but then some do enjoy spreading gloom....

I often wonder if they have their own homes.....unless they think their home will be insulated from any price fall..

I'm not sure property prices will keep going up.

For one - there is an oversupply of rentals as supply now outstrips demand.

2 - China.

It will be interesting to see what will happen if China does fall over.

Australia has had property price crashes in the past and could happen again in the future.

21st Century Dialup Network wrote on Jan 15^th, 2016 at 12:40pm:


Rental vacancies are low in Sydney, how can this be so if there is an oversupply

Property markets are hitting the brakes (so to speak), for similar reasons to Financial & Shares markets AND THAT IS SET TO CONTINUE FOR QUITE SOME TIME!

Talking about the Property Market, do yourself  a favour and go see the movie, The Big Short about the Global Financial Crisis set off by the American Mortgage Crisis.

This is a must see movie. Well documented and truly will have you dropping your jaw at the outrageousness of the American Financial system.

I give it 5 out of 5 and I have never rated a movie 5 out of 5 before.

The irony is, I believe history is repeating itself even though the G.F.C. only happened in 2007.

We humans never learn from history, never ever.

Reading the report from Fitch Ratings reminds me of what Standard and Poor the huge ratings agency got up to in the G.F.C.

This Agency was too scared to drop it's triple AAA rating on the Mortgage Housing Bond business which was dropping through the floor because it was frightened if it did, their business would walk up the street to their Opposition Moody's and get their Triple AAA ratings there.

Unbelievable..but hey that's the Americans baby!

perceptions_now wrote on Jan 15^th, 2016 at 3:09pm:



You are pathologically incapable of accepting good news.  Everything is grim. OIL HAS run out... etc

housing prices will probably slow down and possibly even have a minor correction in line with the way it has operated for the last 100 years.

when someone bothers to note that rents are down a whole $3/wk you know the news is pretty much immaterial.