Overall, they’re predicting that homes in Sydney, Melbourne and Adelaide are subject to falls of two per cent in nominal periods between 2016 and 2019. There also appears to be a growing disconnect between ­detached housing and the apartment market with apartment values tipped to fall at double the rate predicted for detached homes. And analysts are questioning whether rental demands are strong enough to match supply.

The forecast

Sydney’s median apartment price is predicted to fall by up to five per cent by 2019, while Melbourne’s apartment prices could fall by as much as eight per cent, citing increasing supply, tighter banking restrictions, slowing population growth and reduced investor demand as the cause.

Despite their data being predominantly negative, they’re not convinced the market is going to crash, which some media outlets would have you believe. Another independent research provider, Morningstar, agrees with this sentiment for a number of reasons:

• There doesn’t appear to be a clear trigger for an economic slump, reducing the likelihood of a recession

• Despite the unemployment rate rising in the last quarter to 5.8 per cent, they believe employment drivers are still robust

• Strong demand continues to exceed supply for well-located, desirable properties with accessibility to services, transport, and employment centres in Sydney, Melbourne, and Brisbane

• Overseas demand for new apartments also continues to support the capital city apartment market, especially in Sydney and Melbourne

• Supply of new city apartments has grown rapidly, but is likely to slow from 2018

• Historically low interest rates support the demand for housing for both owner-occupiers and investors

• House price growth is showing signs of moderating; somewhat self-imposed and partly a result of regulatory interventions by APRA

• Australia’s major banks do not hold US-type subprime or “no-doc” mortgages that caused the global financial crisis (GFC) recession in the US and Europe in 2008

So what does this mean for you?

While individual opinions regarding the future of the residential property market varies, collectively, we agree the market is unlikely to crash but may experience a prolonged period of flat to modestly lower prices – five to seven years.

If you are investing in property, or are relying on your property for capital or income, it is critical to have a good understanding of the process of price variations and monitor your investments.  

Disclaimer: It is important to note that forecasts are based on current and emerging trends. The future property market indication by BIS Shrapnel is only a prediction, and not a certain prospect.