Powered by MOMENTUM MEDIA
the adviser logo
Borrower

Housing market headed for correction

by Huntley Mitchell & Nick Bendel5 minute read

Almost all major markets are likely to become oversupplied during 2016, a leading forecaster has claimed.

BIS Shrapnel managing director Robert Mellor told Mortgage Business, The Adviser's sister title, that Sydney is likely to be the only capital city that remains undersupplied at the end of 2016.

To continue reading the rest of this article, create a free account
Already have an account? Sign in

“So even with a massive level of high-rise apartment construction at the moment, that market is not going to result in any excess supply developing in the next three years,” he said in the video interview.

“But elsewhere around Australia – even markets like Brisbane which people are fairly bullish on at the moment, we think apartment construction in the inner areas is going over the top and at some point by the end of 2016 there will be some excess supply there.”

Advertisement
Advertisement

Mr Mellor also highlighted Western Australia, which he said is “moving into substantial oversupply” because of reduced net overseas migration and slower population growth.

Local investor demand is expected to “fall off significantly” in markets that are facing an oversupply, particularly inner-city apartments in Brisbane and Melbourne.

Mr Mellor said that strong foreign investor demand is the only thing that might stop a correction happening – but that any delay would come at a cost.

“My big warning is that the more modest correction you get in that higher-density apartment market in 2016, the risk is 2017 and 2018 is going to fall even more rapidly,” he said.

“If you want to isolate the inner-Melbourne and inner-Brisbane markets and look at the high-density component of those markets, at some point construction has to fall by 50 per cent and maybe as much as 60 per cent, because we are at incredibly high levels – unsustainable levels – and ultimately it must lead to significant excess supply.”

[Related: Fresh figures point to property slowdown]

Housing market headed for correction
default
TheAdviser logo
default

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

daniel tuttlebee resimac asset fInance ta l27zun

Resimac takes controlling stake in Sonder

Resimac Asset Finance has expanded its acquisition stake in equipment finance business Sonder Equipment Finance...

READ MORE
asic ta 2

ASIC seeks ‘common-sense solutions’ to breach reporting

The Australian Securities & Investments Commission (ASIC) has committed to “improving” the operation of the...

READ MORE
andrew mills homestart ta htfetw

HomeStart drops graduate loan deposit to 2%

HomeStart Finance, a non-bank lender backed by the South Australian state government, has lowered the deposit hurdle...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more