Detached housing prices are not set for a dramatic fall in the immediate future, according to an international bank chief economist.
Speaking at the Australian Shareholders’ Association Conference in Sydney in May, HSBC Australia and New Zealand chief economist Paul Bloxham said detached dwellings were unlikely to be affected by other factors in the residential property market that cause a decrease in asset values.
“The bulk of our housing stock is actually detached dwellings and we haven’t been building many of those. So it strikes me as unlikely that you’re going to see house prices, as in detached house prices, fall,” Bloxham explained.
However, he qualified his prediction as to the potential appreciation the detached housing sector offered for investors in the short term.
“On the flip side of this as we bring more residential property supply to the market, and the prudential regulator tightens things up, I doubt we’re going to see a repeat of the house price boom we’ve seen,” he said.
Downward pressure on the residential property sector due to supply and demand factors in general might have now been played out, although there remained a few cities proving to be exceptions, he added.
“Most of the estimates suggest we’re approximately at balance at the moment in terms of the housing market. This is an estimate of housing surplus and deficit, supply versus demand, and we’re getting pretty much close to the balance,” he said.
“But there are some places where there are some pretty clear signs we may have a bit of oversupply.
“Melbourne and Brisbane apartment markets in particular are showing a very large ramp up in supply relative to the existing stock and we’ve got fairly clear evidence that some of those dwellings are unoccupied.
“It means you may start to see those prices come down.”
He pointed out those were isolated pockets of the residential property market and should not be regarded as a sign of what was to come for the sector in general.
“That’s not a systemic event if you think about it. It’s only the apartment markets in the centres of these cities,” he said.