House price growth is likely to slow in Sydney and Melbourne after recent strong rises, while other capitals will undergo a burst of growth as they make up lost ground, the Housing Industry Association says.
Despite wide recent differences, over the longer-term price growth across capital cities has stayed within a fairly narrow band with no one city racing ahead, HIA research note shows.
Over the 20 years to June 2016, houses rose at a rate of 6.4% per year in Melbourne, 5.3% in Sydney and 4.3% in Brisbane. Growth rates in the other capital cities sat between Brisbane and Sydney.
“Dwelling price growth does tend to stick within a tight band for all capital cities, especially for houses,” says HIA senior economist Shane Garrett. “It would imply that the markets which [have seen strong growth over recent years, Sydney and Melbourne, have the least capacity to see price growth compared with other capital cities over the coming 4-5 years.
“The cities that currently have the weakest price growth– Perth, Adelaide and Hobart – are the cities that appear to have greatest price growth potential for the coming years. It does balance out.”