Property prices will start rising “modestly” next year after a downturn made housing in Sydney and Melbourne the most affordable in years, an ANZ/CoreLogic report shows.
“The recent drop in property values follows a long period where prices increased at a much faster pace than household incomes,” said CoreLogic head of research Cameron Kusher.
“We predict that price falls will settle later this year, followed by modest price growth starting from 2020.”
Across the capital cities, the house-price-to-income ratio fell to 7.5 times in the December quarter – the period under review – down from 8.1 times a year earlier.
Affordability of units also improved slightly, with the December measure of 6.2 times – down from 6.6 times in the same quarter a year earlier.
The east coast-dominated capital city price declines have also lowered rents. The December figures show renting a capital city house now requiring an average of 27.8 per cent of household income and a unit required 27.1 per cent. These figures were the lowest since 2007, the report shows.
Regional property purchases have not improved in affordability, where for the “vast majority” of regions it remained more affordable to rent, even though the gap between renting and buying was “fairly small”.
And in some areas – such as Darwin, regional Qld, regional SA, regional WA, regional Tasmania and regional NT – it was cheaper to buy than rent, the report says.
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