Leading indicators in the Australian property market have forced a downgrade in the property forecast for 2018, says new data.
SQM Research has revised its forecast due to falling prices in Sydney and Melbourne as well as auction clearance rates, total property listings and asking prices in all five capital cities.
The revision affects five of the capital cities in Australia and has therefore affected the national forecast, which now sits at -2 per cent to +2 per cent.
Recent auction results suggest that the Sydney market activity has deteriorated during April, recent rates have ranged from low to mid 50 per cent, which historically have translated into price falls.
However, Sydney’s Inner West, Lower North Shore and eastern suburb markets are recording higher clearance rates of above 60 per cent, which suggests the top end of the residential market is holding.
Regardless, SQM Research believes that Sydney will now record a decline or at best small gains, changing the forecast from up to +8 per cent to sitting between -4 per cent to 0 per cent.
Melbourne went from an optimistic forecast of up to +12 per cent growth, but that has been revised to hover between -3 per cent and +1 per cent.
Like Sydney, lower auction rates of between 50 per cent and 60 per cent have been recorded in Melbourne, which signals a weaker condition for the city.
Of the downgraded cities, Canberra and Brisbane are the most optimistic, with both anticipating growth of up to +4 per cent and +3 per cent, respectively.
Brisbane has experienced a surplus in apartment stock, but with building approvals falling, it is expected to reach equilibrium within the year.
Canberra had very strong market conditions in 2017, but so far this year, asking prices have not risen and the growth of the city is predicted to slow down now.
Due to rises in vacancy rates, which was unexpected by SQM, Darwin has been downgraded to -5 per cent to 0 per cent, with fears that the housing market in the city has not yet bottomed out.
Perth, Adelaide and Hobart all remained unchanged.
Despite the downgrades for the country, SQM Research does not expect a general housing price crash to occur this year.
The conditions required for a downturn are not in the market due to a healthy economy, relatively low unemployment, population growth and only isolated oversupply of new real estate.