<section data-scroll-anchor="false" data-testid="conversation-turn-48" data-turn="assistant" data-turn-id="request-WEB:55d7c6ac-8e6d-4881-ad49-0ed9bf66d1cc-23" dir="auto">
Melbourne’s apartment market entered 2026 with renewed momentum, but the recovery is uneven, policy-driven, and increasingly shaped by constrained supply.

According to the RPM Apartments &amp; Townhomes Market Report (April 2026), apartments have begun to outperform detached housing on key metrics,yet that performance is occurring against a backdrop of falling approvals and a tightening development pipeline.

At the end of 2025, Melbourne unit values reached a three-year high of $656,500, recording quarterly growth of two per cent. That figure edged ahead of the 1.8 per cent growth recorded in the house market over the same period, marking a notable shift in relative performance. While modest in absolute terms, the outperformance is significant given the sustained dominance of houses through much of the previous cycle.

This shift has been driven in large part by policy. The federal government’s expanded five per cent Deposit Scheme has had a disproportionate impact on apartment demand, particularly in Melbourne where the $950,000 price cap captures a large share of medium- and high-density stock.

As RPM notes, the scheme “heavily favours medium and high-density dwellings,” effectively accelerating demand in the apartment sector.

The impact is most visible in buyer activity. Victoria recorded more than 43,000 new housing loans in Q4 2025, the highest quarterly volume since mid-2022 and one of the strongest results in over a decade. This lift was broad-based across all buyer types, with first home buyers, owner-occupiers and investors all returning to the market with greater confidence.

This surge in demand has flowed directly into apartment pricing, particularly in Melbourne’s middle and outer rings. Middle-ring unit values reached approximately $757,500, a four-year high, while outer-ring units climbed to a record $650,000. Quarterly growth of 2.9 per cent and 2.5 per cent respectively significantly outpaced both the inner ring (0.8 per cent) and the broader house market.

&nbsp;

<img alt="RPM" data-entity-type="file" data-entity-uuid="4628dde5-ad63-4b03-b18e-77d0f750e2aa" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-24%20at%209.23.32%E2%80%AFAM.png?VersionId=ig6mqc7Oz7UaszRuzULrGtLPUxGf4NJC" />

&nbsp;

The divergence between apartments and houses is also being shaped by affordability. Detached housing remains out of reach for many buyers, pushing demand toward apartments as a more accessible entry point into well-located suburbs. This is particularly evident among first home buyers and downsizers, both of whom are increasingly prioritising location, amenity and lifestyle over land size.

At the same time, population growth continues to underpin demand. Victoria added more than 122,000 residents in the year to Q3 2025, with Melbourne attracting both overseas migrants and interstate movers, partly due to its relative affordability compared to other capitals.

&nbsp;

<img alt="Population" data-entity-type="file" data-entity-uuid="49e10567-a8b3-47c3-afbd-290f0bb62c49" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-24%20at%209.22.25%E2%80%AFAM.png?VersionId=.2Drmko4TPh02X55JdF3mIC1EcG0ZfGl" />

However, the most critical factor shaping the apartment market is not demand, it is supply.

Apartment approvals across Greater Melbourne have fallen sharply, signalling a constrained pipeline of future stock. In Q4 2025, just 2,339 apartments were approved, down 20 per cent on the previous quarter and 47 per cent lower than the same period a year earlier. On an annual basis, 11,066 apartment approvals were recorded, an improvement on the previous year, but still well below medium- and long-term averages.

&nbsp;

<img alt="Apartment approvals" data-entity-type="file" data-entity-uuid="12f2e7bc-fe01-40c0-80b5-9e829b279d98" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-24%20at%209.21.56%E2%80%AFAM.png?VersionId=5mnIXkXGoDgIJdAFhA0alm0cSKzEytqZ" />

This decline reflects a broader contraction cycle that has been underway since 2020. As RPM notes, “apartment approvals appear to be sliding back into a downward trend,” with developers increasingly focused on launching and completing existing projects rather than initiating new ones.

The reasons are well understood. Construction costs have risen more than 20 per cent since 2021, driven largely by labour shortages and material price escalation. At the same time, financing conditions have tightened, with lenders requiring higher contingencies and taking a more cautious approach to risk. Combined with recent interest rate rises, these factors have made feasibility more challenging, particularly for higher-density projects.

This dynamic is creating a disconnect in the market. Demand for apartments—particularly at the more affordable end—is strengthening, while the pipeline of new supply is weakening. In the short term, this may limit the number of new projects coming to market. Over the medium term, however, it is likely to support price resilience and potentially further outperformance relative to houses.

There are some signs of policy-driven supply response. The introduction of Victoria’s Mid-Rise Code, which streamlines approvals for four- to six-storey developments, is expected to improve delivery in well-serviced middle-ring locations. However, this is unlikely to materially offset the broader decline in apartment approvals in the near term.

Despite the positive momentum at the end of 2025, the outlook for 2026 has become more complex. Two interest rate rises early in the year have already impacted consumer confidence, while broader cost pressures, particularly energy and fuel, are feeding through to construction and development costs.

“Victoria’s built form market ended 2025 on a high, but early 2026 rate rises quickly reversed the momentum,” RPM notes.

The implication is that while apartments are currently outperforming houses, the trajectory of that outperformance will depend on how these competing forces evolve. Policy support and affordability are clearly working in favour of apartments, but constrained supply and rising costs are likely to shape the pace and nature of future growth.

What is increasingly clear is that apartments are playing a more central role in Melbourne’s housing market. As population growth continues and affordability pressures intensify, higher-density housing is becoming not just an alternative to detached homes, but a primary solution to the city’s housing needs.
</section>

Joel Robinson

Units lead Melbourne price growth as apartments outperform houses: RPM

Brunswick is set for some of its largest apartments ever delivered with the upcoming new development Frith &amp; Howarth, where the apartments are around 20 per cent larger than what has come before it in the sought-after suburb.

Developer Young Group focused its design on Frith &amp; Howarth around size and scale, but within a boutique building, to create a mini neighbourhood within the mid-rise development. There are just 24 apartments in the mid-rise building on Victoria Street, a short walk to Brunswick Station and the cafe and dining strip along Sydney Road.

“We spent hours comparing what’s currently on the market so we could offer genuine points of difference,” Young Group says, pointing to room sizing, storage, and functional planning as key drivers behind the design.

All of the two-bedroom apartments in the building have been snapped up, with just the large three- and four-bedroom apartments, with the biggest floorplans and best outlooks, remaining.

[smartcode_project:default project_id=134317 project_image_fid=354139]

Apartments open directly into open-plan living zones where full-height glazing draws light deep into the apartment. Sliding doors extend the space outward to terraces, many oriented toward the adjacent park or back toward the city skyline.

Kitchens sit within this central space, anchored by sculptural island benches that reference the building’s faceted exterior language. Storage is integrated across multiple layers, overhead cabinetry, concealed joinery, and, in larger configurations, dedicated sculleries or butler’s pantries.

[smartcode_project:default project_id=134317 project_image_fid=354137]

The penthouse is the largest ever offered in Brunswick. The penthouse measures nearly 400 sqm all-up, with 242 sqm of internal space complimented by a further 149 sqm of terraces.

It spans the whole top floor and has four bedrooms, four bathrooms, and parking for four cars.

[smartcode_project:default project_id=134317 project_image_fid=354133]

Low maintenance resident amenity has been created in the form of a landscaped rooftop, complete with&nbsp;vegetable plots, outdoor cooking areas, and aflresco dining spaces, designed as a place for neighbours to gather outside of their homes.

“To enable connection with neighbours, generous rooftop gardens with communal spaces and outdoor cooking areas offer a chance to develop a sense of community,” says John Patrick, Principal of <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick Landscape Architects</a>.&nbsp;

“Private open spaces with a selection of native and exotic plantings and gorgeous city views on the rooftop create a high-end aesthetic, with a low maintenance lifestyle. The perfect balance, so that residents can enjoy a serene living space.”

[smartcode_project:default project_id=134317 project_image_fid=354134]

Sustainability is embedded at both the building and apartment level. <a href="https://www.apartments.com.au/new-apartments/frith-howarth-288-290-victoria-street-brunswick-vic-3056">Frith &amp; Howarth</a> is one of only a small number of all-electric residential developments in Brunswick, supported by solar infrastructure, EV-ready parking, and high-performance glazing. These measures sit alongside less visible systems such as rainwater reuse and high-grade insulation, reducing long-term operational costs while maintaining consistent internal conditions.

Positioned within walking distance of Brunswick Station, Route 96 trams, and established retail along Sydney Road and Barkly Square, the development balances access to transport with proximity to open space, a combination that has become increasingly difficult to secure in inner-city sites.

“These exquisite homes are nestled in a culturally diverse neighbourhood, with parklands and nature right on your doorstep,” says Young Group.

[smartcode_project_cta:default project_id=134317]

Frith & Howarth to deliver Brunswick’s largest apartments

<a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> in Brunswick is entering its final stages of construction, with the removal of the project’s last tower crane and the unveiling of the building’s full façade marking a significant milestone ahead of completion this coming spring.

The Park Street development, designed by <a href="https://www.apartments.com.au/architects/bates-smart">Bates Smart</a>&nbsp;and Mirvac Design with landscaping by <a href="https://www.apartments.com.au/landscape-architect/jack-merlo">Jack Merlo</a>, is now largely structurally complete, with internal works progressing across the 169-apartment project opposite Princes Park.

<a href="https://www.apartments.com.au/builders/mirvac-construction">Mirvac Construction</a> Project Manager Sam Payne said the latest update reflects a transition from structure to refinement.

“Since our last update, all façade panels have been installed and the scaffolding and gantry has come down, unveiling the building in its full form for the very first time,” Payne said.

“A significant milestone was reached this month with the removal of our final tower crane, signalling the completion of major structural works and a pivotal step forward in the building’s transformation.”

[smartcode_project:default project_id=4802 project_image_fid=366856]

Apartments are now well advanced internally, with joinery completed to level eight and tiling to level six, alongside the delivery of a prototype apartment used to set the benchmark for the remaining residences.

This next phase coincides with the release of a completed furnished residence, styled by MCM House, and the introduction of private buyer tours, giving purchasers a clearer understanding of the finished product ahead of settlement.

<a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> will comprise 169 one to four-bedroom apartments, with completion targeted for early spring. Interiors focus on natural materials and muted tones with two design schemes, while kitchens and bathrooms adopt a restrained palette anchored by stone, timber and textured finishes.

Bates Smart Director Jeffery Copolov said the project reflects a shared design direction centred on liveability and sustainability.

“Blending Mirvac and Bates Smart’s focus on wellness and sustainability, <a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> offers a new kind of conscious, elevated living in Melbourne’s inner north,” Copolov said.

<a href="https://www.urban.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> presents Mirvac's third parkside collaboration with&nbsp;<a href="https://www.urban.com.au/architects/bates-smart">Bates Smart</a>&nbsp;in Victoria.&nbsp;Their previous collaborations delivered two of the city’s landmark apartment buildings: The Melburnian opposite Kings Domain and The Eastbourne on Fitzroy Gardens.

[smartcode_project:default project_id=4802 project_image_fid=366857]

A key focus of the development is its landscape-led amenity offering. The central courtyard, spanning around 600 sqm, will feature established trees and planting grown off-site, alongside communal lawns and seating areas designed for everyday use.

Development Manager James Gardner said the outdoor spaces are central to the project’s lifestyle positioning.

“<a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> isn’t just a home, it’s a complete lifestyle offering, and the resident amenity is just one example of the elevated living experience the soon-to-be-complete building will be known for,” Gardner said.

The courtyard connects to a series of shared indoor and outdoor spaces, including a residents’ lounge, dining room, library and secondary west-facing garden area, designed as extensions of the apartments themselves.

Located directly opposite Princes Park and around four kilometres from the CBD, the development places residents within one of Melbourne’s most established inner-north precincts, with access to open space, transport and the retail and hospitality offerings of Brunswick and Carlton.

With façade works complete and landscaping and final finishes now underway, <a href="https://www.apartments.com.au/new-apartments/prince-parade-by-mirvac-brunswick-701-park-street-brunswick-vic-3056">Prince &amp; Parade</a> is moving into its most active construction phase, with permanent services and external works to be finalised in the coming months ahead of completion in spring.

[smartcode_project_cta:default project_id=4802]

Mirvac’s latest landmark, Prince & Parade Brunswick, enters final construction phase

Boutique Perth developer ADC has unveiled its latest project.

The developer, which focuses on bringing apartments to some of Perth's most premium inner-city and riverside suburbs, has launched <a href="https://www.apartments.com.au/new-apartments/mos-lane-mosman-park-46-manning-street-mosman-park-wa-6012">Mos Lane</a>, 68 luxury apartments and townhouses in the heart of <a href="https://www.apartments.com.au/developments/mosman-park-wa-6012">Mosman Park</a>.

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Alongside the one-, two-, three- and four-bedroom apartments, the development will also include five two-level townhomes and two luxe penthouses. ADC is also introducing a significant retail offering for residents through Mos Lane Village, which will feature a wellness studio, fish and chips shop, barber, and florist, adding a layer of amenity not typically found in the predominantly residential Mosman Park area.

Construction has already commenced on the project, which sits just a short walk from the Swan River, Mosman Park Bowls Club, and Mosman Park Golf Course.

House Agency Directors Tom House and Lachlan McDonald say they are fielding the majority of buyer interest from local downsizers, as well as buyers with a long-standing affinity for Mosman Park.
</section>

[smartcode_project:default project_id=148957 project_image_fid=364591]

Mos Lane will comprise two buildings; Samson House and Manning House, which have been designed by&nbsp;<a href="https://www.apartments.com.au/architects/nelson-koo">Nelson + Koo</a>, an emerging design consultancy specialising in the masterplanning and design of mixed use places and spaces.

The two buildings adopt distinct architectural responses to their surroundings. Manning House references the strong roof forms of nearby homes, with floorplates oriented to maximise light and long-range views, while Samson House is organised around a central atrium designed to bring daylight deep into the building and create a greater sense of openness.

At ground level, the inclusion of five townhomes introduces a typology more commonly associated with Mosman Park’s established streets, each with private courtyards and direct frontage, offering a transition between traditional housing and apartment living.

[smartcode_project:default project_id=148957 project_image_fid=364103]

Interiors have been led by Melbourne-based Hecker Guthrie, with an emphasis on practical, long-term liveability. Residences incorporate sculpted joinery, generous storage and flexible multi-purpose rooms that can adapt to changing household needs, whether for working from home, guest accommodation or additional living space.

Material selections draw on a restrained palette of textured stone, timber and neutral tones, with options for lighter or darker schemes. Detailing such as fluted glass, full-height joinery and integrated appliances is intended to balance functionality with a more refined residential finish.

Outdoor spaces are a consistent feature across the development, with balconies and terraces designed for dining and entertaining, and larger apartments incorporating outdoor kitchens. Orientation has been considered to allow residents to choose between morning or afternoon sun, while mature street trees and landscaped communal areas contribute to a softer streetscape.

[smartcode_project:default project_id=148957 project_image_fid=364107]

Shared amenities are positioned to support both day-to-day convenience and occasional use. These include a private dining room with a caterer’s kitchen, alfresco entertaining areas, and a bookable guest suite for visiting friends and family. Additional practical features such as a resident workshop, storage facilities, car and pet wash areas, and concierge-style services for cleaning and dry-cleaning collection reflect a focus on usability.

Positioned between the Swan River and Cottesloe Beach, and within reach of schools such as Iona Presentation College and St Hilda’s Anglican School, the development is aimed at a broad buyer group, from downsizers seeking a lower-maintenance alternative to larger homes, through to local residents looking to remain in the area in a different housing format.

Mos Lane represents one of the more significant additions to Mosman Park’s limited pipeline, combining new housing supply with a village-style retail centre in a suburb where opportunities for large-scale redevelopment are relatively constrained.

[smartcode_project_cta:default project_id=148957]

Living village precinct set for Mosman Park as ADC launches Mos Lane

An entity linked to I&amp;D Group Founder Ivan Filipović has filed plans for a new residential development at 188–202 Swan Street in Cremorne, targeting a prominent site within the tightly held Swan Street activity corridor.

The proposal seeks to redevelop the consolidated Swan Street landholding into a <a href="https://www.apartments.com.au/new-apartments/188-202-swan-street-cremorne-vic-3121">high-density mixed-use project</a>, replacing a series of existing commercial buildings with a significantly scaled residential outcome. The planning submission positions the development as a response to increasing demand for housing in well-connected inner-urban locations, particularly within established activity centres.

Plans outline the construction of a 14-storey building delivering 165 apartments above a four-level basement, alongside a ground-floor retail and commercial offering designed to activate the streetscape. A key feature of the scheme is a new north–south pedestrian link connecting Swan Street to Railway Place, intended to “enhance permeability and provide an active, publicly accessible connection through the site.”

<img alt="First Look: Plans lodged for Ivan Filipović-linked Cremorne apartment project on Swan Street" data-entity-type="file" data-entity-uuid="7332a8f8-dd2b-483d-b86e-320658838c84" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/cremorne.png?VersionId=cXm8vAaRdHh.LpYVbecrRkjckgu9mtAF" />

The development will retain part of the existing built form at 198–200 Swan Street, while the remainder of the site will be cleared to accommodate the new structure. Basement levels will provide 196 car spaces and 113 bicycle spaces, with vehicle access from Railway Place. Communal amenity is distributed across the building, including a shared outdoor area on Level 1 and a rooftop terrace for residents.

Ground level uses include retail tenancies fronting Swan Street and the pedestrian link, a residential lobby, and a flexible commercial space positioned to support community-oriented uses. The planning report notes this space “could be offered as a flexible space within the development for community groups,” supporting short-term or longer-term occupancy arrangements.

<img alt="First Look: Plans lodged for Ivan Filipović-linked Cremorne apartment project on Swan Street" data-entity-type="file" data-entity-uuid="8208bf7b-cc67-485d-ad0f-1d73a74c907f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/cremorne%20lane.png?VersionId=69ctjC0txXv0zCHy7qQUpJyGwvPAT7gw" />

The site sits within the Swan Street Major Activity Centre, surrounded by a mix of retail, hospitality, and emerging residential development, and directly opposite tram services along Swan Street. East Richmond Station is located to the south, providing strong rail connectivity, while the broader Cremorne precinct continues to evolve as a mixed-use hub.

I&amp;D Group, founded by Ivan Filipović, is regarded as one of Victoria’s largest formwork contractors, partnering with major construction firms across large-scale public and private developments. The Swan Street proposal signals a move into development-backed opportunities tied to strategic inner-city sites.

First Look: Plans lodged for Cremorne apartment project on Swan Street

Downturn

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EXPERT OBSERVATION
After many years of strong increases in dwelling values, the two largest housing markets, Sydney and Melbourne, have begun to see values fall over recent months.  While values are declining in both cities the speed of the declines vary greatly, both compared to one another and compared to other recent downturns in these housing markets.
<img src="https://corelogic.com.au/sites/default/files/styles/media_crop/public/2018-04/2018-04-23-blogim1.png" alt=""> 
Since values peaked back in July 2017, Sydney dwelling values have fallen by -3.9% over the following eight months.  If we look at the three previous downturns highlighted in the above chart, in the 2003-06 downturn values had fallen by -5.8% eight months in and went on to decline by -8.2% over 25 months before values started rising again.  In the 2008-09 downturn, values were -4.9% lower eight months in and went on to fall by -7.0% over 12 months.  The 2010-11 downturn saw values fall from their peak to their trough by -3.7% and after 8 months they had fallen by just -1.0%.
<img src="https://corelogic.com.au/sites/default/files/styles/media_crop/public/2018-04/2018-04-23-blogimg2.png" alt="">
 Dwelling values in Melbourne have not been falling as quickly or for as long as those in Sydney.  After the market peaked in November of last year, values have fallen by -0.7% over the four months to March 2018.  In 2003-04, values fell by a total of -3.0% over nine months and were -1.0% lower after four months of declines.  In 2008-09 values fell for 11 months, they had fallen by -3.9% over the first four months and ended up declining by -9.4%.  In the first four months of the 2010-12 period of value falls values were -2.2% lower before they ultimately fell by -8.4%.  Outside of these recent declines, values recorded a peak to trough fall of -8.3% between 1989 and 1992 with values falling by -2.5% over the first four months of this period.
Two other capital cities, Perth and Darwin, have been recording value falls for some time.  Although their declines are somewhat lengthier and different to recent falls in Sydney and Melbourne, it is valuable to analyse how these declines have evolved.
<img src="https://corelogic.com.au/sites/default/files/styles/media_crop/public/2018-04/2018-04-23-blogimg3.png" alt="">
Perth dwelling values increased in March 2018 however, over the period from June 2014 to February 2018 values fell by -11.0%.  There is no guarantee that these declines are over as yet although the pace of these declines has steadied recently.  It is also interesting to note that during the most recent period of value falls the declines began much more moderately on a month-to-month bases than they did in 2006-07, 2008-09 and 2010-11, with the downturn stretching on much longer than any of these previous downturns.  In 2006-07, values fell by -3.7% in five months, in 2008-09 values were -11.0% lower over 13 months and in 2010-11 values declined by -9.1% over 19 months.
<img src="https://corelogic.com.au/sites/default/files/styles/media_crop/public/2018-04/2018-04-23-blogimg4.png" alt="">
 Darwin has only seen two recent period of market downturn, between October 2010 and September 2011 and from May 2014 to February 2018 (values rose over March 2018).  Again, it should be noted although values have risen over the month it doesn’t necessarily mean the downturn is over.  Over the 11 month downturn in 2010 and 2011, Darwin dwelling values fell by -7.9%.  The more recent downturn saw value declines start slower than those in 2010-11 with the downturn stretching for much longer.  As at February 2017 Darwin dwelling values have fallen by -22.3% from its previous peak in May 2014.
While these charts are interesting to consider they don’t provide any particular guidance as to how deep or elongated the current downturns in Sydney and Melbourne may be.  The weak housing market conditions in Perth and Darwin were largely a symptom of weak economic and demographic conditions, while the current downturns in Sydney and Melbourne are occurring against reasonably strong economic and demographic conditions; the slowdown is primarily being influenced by tighter credit conditions.  
What is interesting is that comparing to Perth and Darwin shows that just because they have started falling slower than other housing market downturns doesn’t necessarily mean they won’t end up as a deeper and longer downturn.  Of course the reverse is true as well but it will be interesting to see how deep and how long these current downturns persist for in Sydney and Melbourne and whether they lead to downturns in other cities and regions too.
CAMERON KUSHER is head of research for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
</body></html>

ckusher-ujnxiKuFQs

Are all property downturns the same?

<html><body>
EXPERT OBSERVER
There’s a startling inconsistency in Australian news media when it comes to the treatment of real estate prices.
When actual data is published, showing what actually happened with house prices, media will savage the figures (if they are positive, as they were in March and April) and dismiss them as irrelevant or misleading. That’s journalism, right? Journalists are supposed to challenge things.
But if someone makes a forecast about prices which is negative, news media will accept that without question. And, worse, media will turn this speculation into a fact. It’s not a case of “prices are forecast to fall”; it’s presented as “prices will fall”.
This inconsistency in the approach of media speaks volumes about the mentality of journalists –
- If it’s a positive, attack it;
- If it’s a negative, make love to it.
Data from both CoreLogic and SQM Research showed prices resisted the impacts of virus shutdown in both March and April, with prices rising to some degree in most markets around the nation. We’re three months into the covid-19 schemozzle and there’s still no evidence of the price collapse predicted by the usual suspects.
But this was broadly challenged by news media as being misleading and untenable. Most headlines early in May, reporting the April figures, were extremely negative. One media outlet managed to turn all that solid price data into this headline: “Real Estate Markets Collapse.
It’s essentially about click-bait and the truth is optional – but, in other walks of life, if someone uses that level of deception and dishonesty to try to make money, they end up being charged with serious offences and in some cases go to jail.
Contrast all that with the treatment in the past week of forecasts for house prices by some of the big banks. These have been quite negative and news media has had a field day with those reports: no one has questioned or challenged them at all.
And they should be challenged, because the track records of bank economists in forecasting anything, but in particular real estate prices, are notoriously bad.
(As an aside, observe the record of Bill Evans, chief economist for Westpac, in predicting interest rates – he will make a forecast about likely movements in the next 12 months, with lots of publicity, but in perhaps two months’ time will issue a new, different, forecast. This begs the question: what was the value of your forecast two months ago, which you are now suggesting is wrong?)
If ever something deserved to be attacked by journalists, it’s the forecasts of bank economists about the housing market. Collectively, they have a very low level of credibility.
Let’s take National Australia Bank as a case study. The bank publishes regular forecasts about residential property prices, including the quarterly NAB Residential Property Survey reports. I’ve been reading NAB’s forecasts for many years and here’s what I know to be true – the forecasts are never correct. And I do mean never.
They always err on the side of pessimistic and invariably they are wrong.
Here’s a recent example. NAB published one of its reports in January 2019, containing forecasts for house prices for capital cities for the coming year.
Here what they predicted: capital cities on average would record a 3.8% fall in house prices in 2019. Sydney would drop 5.6%, Melbourne would decline 7.0%, Brisbane would deliver zero growth and other state capitals would deliver minimal growth.
News media, of course, gave this considerable fanfare and treated the forecasts as facts – i.e. Melbourne prices will fall 7% by the end of the year.
Here’s what actually happened, according to three major research entities which publish price statistics – and also according to NAB itself.
According to the latest NAB report, the capital city average for houses in 2019 was actually a rise of 2.9%, not a fall of 3.8%. The capital average for apartments was a rise of 3.4%, not the 4.3% decline that the NAB report forecast a year earlier.
The Melbourne result was a rise of 4.6% for houses and a rise of 6.5% for apartments, not the big declines that NAB had forecast. And in Sydney, there was a rise of 6.1% for houses and a rise of 3.4% for apartments, in contrast to the declines of 5.6% and 5.5% that the NAB report of January 2019 had forecast.
It’s quite a dismal failing, isn’t it, when you predict something will decline 5.6%, but it actually rises 6.1%.
NAB chief economist Alan Oster did not mention any of that in his recent media soundbites on his latest report. Here’s your credulity rating with me, Alan: 0
But the contrasts between the NAB forecasts and the eventual reality are even more stark when you look at the figures from more credible sources.
According to the figure from three major sources, the capital city average result for house prices in 2019 was a rise 5.5% (Domain), 2.1% (CoreLogic) and 2.9% (SQM Research).
The result for Sydney houses was a rise of 6.8% (Domain), 6.1% (CoreLogic) and 4.8% (SQM). Remember, NAB forecast a 5.6% decline for Sydney house prices.
The result for Melbourne houses was a rise of 8.7% (Domain), 4.6% (CoreLogic) and 5.7% (SQM) – not the 7.0% decline NAB had forecast.
There are similar contrasts with the other cities. Hobart, for example, rose 15.6% (Domain) and 11.7% (SQM), whereas the NAB report had forecast a 2019 rise of just 1.8%.
Without boring you with any more statistical detail, I can tell you that the NAB reports have been similarly, and consistently, wrong with their price forecasts year after year. They always lean towards negativity and real estate keeps on proving them wrong.
Yet, this nation’s gaggle of non-journalists has accepted their latest pessimistic outpouring without a single challenge. Its new forecasts, which are quite negative, have been celebrated in media across the country.
Shame on all of you for being so willing to heap further misery on Australian households without any credible justification.
Terry Ryder is the founder of hotspotting.com.au ryder@hotspotting.com.au twitter.com/hotspotting
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terryryder-YECXbqmri2

House price forecasts are usually wrong: HotSpotting's Terry Ryder

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House prices continue to defy forecasts of dramatic decreases from the virus shutdown – and the significance of that continues to be downplayed and misreported by mainstream media.
It would be refreshing is journalists could simply report the facts, in an even and balanced way, rather than go to extraordinary lengths to find negatives to feature in their headlines.
Let’s look at the facts. Figures published on 1 May by CoreLogic show that house prices nationally recorded another small increase in April.
The CoreLogic figures confirmed those published a few days earlier by SQM Research, showing that most capital cities had recorded rises in the past month.
The CoreLogic figures indicate that six of the eight capital cities, and six of the seven regional jurisdictions, recorded some level of increase in their house price indexes during April.
The biggest increases for the month were recorded in Darwin and Regional Tasmania, which both rose 1.1% in April.
Nationally, there was a 0.2% increase in house prices during the month. It’s a very small increase - but in the circumstances any rise is remarkable.
And it defies media forecasts a significant decline in April.
A month ago, when the figures for March (showing price rises in most markets across the nation), media generally dismissed those figures as being insignificant, as they (allegedly) pre-dated the full impact of the coronavirus shutdown.
Most articles in early April said the March figures were irrelevant and that those for April would show the full impact of the shutdown, with significant decreases predicted. There were some very negative and quite alarmist headlines a month ago.
However, the CoreLogic data shows that the housing market remains resilient in the face of the considerable forces created by the economic downturn. While sales activity has dropped markedly, and rents have fallen in some cities, housing values have not dropped.
The price data is strong also for the three months ending 30 April. All eight capital cities recorded increases in their house price indexes, headed by a 3.4% increase in Darwin and a 3.2% rise in Sydney.
Six of the seven regional markets also rose in the past quarter, with Northern Territory the only exception. The regional increases were headed by a 3% uplift in Tasmania and a 2.7% rise in Victoria.
Nationally, there was a 2% increase in the house price index in the past three months.
In annual terms, house prices are up 8.3% nationally, including a 9.8% increase in the combined capital cities index.
Keep in mind that the first of the share market meltdowns occurred on 20 February and we are now in May. We’re 10 weeks into the virus-induced economic schemozzle and, according to usual suspects like Shane Oliver of AMP Capital, we should be seeing evidence of a dramatic drop in property values.
But we’re not. We’re seeing a big fall in sales activity, but the number of properties for sale has also reduced significantly, so supply and demand remains in some sort of balance in many locations. So there’s no great pressure for prices to fall.
All this confirms anecdotal evidence from the coal face of the property industry. I’m having lots of conversations with valuers, buyers’ agents, investment advisers and marketers of various sorts who are seeing good sales happening amid strong competition and values staying firm.
The number of potential buyers in the market has dropped, but the active ones are genuine buyers, with the tyre-kickers having dropped out.
Terry Ryder is the founder of hotspotting.com.au ryder@hotspotting.com.au twitter.com/hotspotting
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House prices defy forecasts of dramatic virus downturn: Hotspotting's Terry Ryder

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Australian real estate investment trusts (A-REITS) have good gearing buffers to withstand the looming property value declines, according to a recent report from Moody's Investors Service.
The predicted downturn is due to weak demand and slowing economic activity caused by the coronavirus pandemic.  
The report found that property values would need to fall significantly for A-REITs to breach gearing and covenant thresholds.
“We expect retail property values to decline in the next 12-18 months because of weak demand and economic activity resulting from coronavirus related disruptions,” saidsenior analyst Saranga Ranasinghe.
“Office property values will fall to a lesser degree, and continued demand will support industrial property values.”
The report futher found that average property values would need to fall 34% to breach the top end of the rated REITs' target gearing (debt/asset) ranges and fall 55% to breach their covenant thresholds.
The REITs came into the downturn with balance-sheet buffers to withstand an increase in gearing. 
According to the report retail A-REITs will experience the largest declines in property values.
“In response to coronavirus disruptions, Vicinity Centres (VCX, A2 negative), Shopping Centres Australasia Property Group (SCP, Baa1 stable) and Charter Hall Retail REIT (CQR, Baa1 stable) raised equity to strengthen their balance sheets,” added Ranasinghe.
CQR's gearing will approach covenant thresholds if property values fall more than 25%. Without debt reduction, Scentre Group's (SCG, A2 negative) gearing will breach its rating tolerance levels if property values fall more than 27%.
But SCG's gearing will remain well within its covenant thresholds.
Diversified A-REITs with retail property are also exposed to devaluations; office value declines are likely to be moderate.
Despite exposure to retail, the risk to diversified A-REITs is mitigated by exposure to industrial as well as office properties.
Stockland Group (SGP, A3 stable) has the largest exposure to retail. SGP has significant buffers within its covenants, but it will approach its rating threshold if its retail property values decline more than 30%.
We expect office property values will decline only moderately over the next 12-18 months and do not see material risks to gearing levels of other diversified A-REITs.
Industrial property values supported by e-commerce penetration and increasing focus on supply chains.
Unlike retail and office, we expect industrial property values will be flat to up slightly over the next 12-18 months.
The pandemic has accelerated e-commerce penetration in Australia and increased focus on supply chains.
The report concluded that Goodman Group (GMG, Baa1 stable), Goodman Australia Industrial Partnership (GAIP, Baa1 stable), and Charter Hall Prime Industrial Fund (CPIF, Baa1 stable) will benefit most.
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j.ballantyne1990-6AQqhLzZaK

Most Australian REITs can withstand property value declines: Moody’s Investors Service

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EXPERT OBSERVER
The Reserve Bank Governor provided a cautiously optimistic overview of the Aussie economy and a reasonably upbeat assessment of the Reserve Bank’s response to the pandemic crisis. In his opening statement to the Select Committee on COVID-19 today, he said “The evidence so far is that our mid-March package is working as expected and it is helping build the necessary bridge to the recovery.” Dr Lowe also stressed, “With the national health outcomes better than earlier feared, it is possible that the economic downturn will not be severe as earlier thought. Much depends on how quickly confidence can be restored.”
On interest rates: Governor Lowe remained cautious about the road to recovery and signalled that record low interest rates and unconventional monetary policy support would remain in place “for a few years.” He stressed, “But even as the recovery gets under way, there will still be a shadow cast by the pandemic. As a country, we will need to turn our minds as to how to move out of this shadow. A reform agenda that makes Australia a great place for businesses to expand, invest, innovate and hire people would certainly help. For its part, the RBA will maintain its expansionary settings until progress is being made towards full employment and we are confident that inflation will be sustainably within the 2–3 per cent target band.”
On fiscal policy and JobKeeper: In the lengthy cross examination by Senators that followed, Dr. Lowe emphasised that, “It’s very important we don’t withdraw fiscal stimulus too early” and “fiscal policy will have to play a more important role” in the future. In reference to the government’s JobKeeper wage subsidy program, Dr. Lowe said that the Reserve Bank used a much more granular approach to its labour market forecasts and assumptions, “We started the forecasting process [in March] at the number of hours worked.” No assumptions on the number of people on JobKeeper or JobSeeker were considered. And he noted “JobKeeper has kept the connection between workers and firms. The recovery would be more difficult without JobKeeper.” He also expected to see some form of JobKeeper retained for specific industries, such as tourism with international borders unlikely to be re-opened before year end.
On the labour market: Dr. Lowe reiterated the importance of developments in the labour market: “My main focus has very much been on hours worked. I’m expecting to see a decline in May but not of the magnitude of April. The labour force has a lot of definitional issues.” The Governor had previously forecast that hours worked in the economy could fall by 20 per cent. But he now believes that the decline may be closer to 15 per cent and wants to see a “reasonable increase in hours worked in July and August.” And when prodded on his views on the fabled “full employment” number, Dr. Lowe proffered “In February I would have said 4.5 per cent. We were making progress. We know from previous sharp economic downturns that there is scarring in the labour market. It is quite possible that the estimate of full employment rises back up to 5 per cent.”
On monetary support for the economy and negative interest rates: The Governor also said that the Reserve Bank remains “focused on keeping funding costs low across the country” and “keeping interest rates low for bank borrowers. Central banks work through lending not spending.” When prodded on unconventional monetary policy Dr Lowe said, “I think negative interest rates are extraordinary unlikely here. The reason that people are sceptical is the cost to the financial system as it impairs profitability and the ability to lend. Negative interest rates don’t work.” If required, “we could purchase more bonds”, but “as things stand at the moment we don’t see need to do more” as the banks “have a lot of liquidity”. And “we’ve bought $50 billion worth of government bonds that will eventually mature.”
On reforms and infrastructure spending: "The economy has become less dynamic", said, Dr. Lowe and “a reform agenda to encourage investment, hiring would help…regulation is a barrier to entrepreneurship”. On infrastructure spending the Governor said, “Surely there are plenty of good infrastructure projects with a risk adjusted return for Australian society of better than 1.5 per cent.”
On government debt: “The level of public debt, while rising in Australia, is still low. There is strong demand for debt and the government has the capability to issue more debt.”
On the global economy: “There are a lot of domestic ramifications from a weak global economy.”
On recent economic data and forecasts: “We’re tracking between the baseline and the upside forecast scenarios. The recent data has been better than expected but I still a lot of challenges ahead. Even in an upside scenario it’s still a pretty depressing scenario. On policy moves he notes in hindsight and with reference to JobKeeper revisions “We would have done the same thing.”
APRA Chair remarks to the Board of International Banking Federation
APRA Chair Wayne Byers provided an online speech, “Going the distance: APRA’s approach to the COVID-19 fight.”
On pandemic preparation: “In Australia, we have had prudential guidance on pandemic planning for financial institutions in place for many years, and it has certainly proved its worth in recent months.”
On solvency pressures: “Measures to backstop liquidity have worked well and bought us time, but solvency pressures are mounting as credit risks come to the fore.”
On financial services disruption: “Thankfully, firms’ plans have stood up well and (along with a great deal of reactive work behind the scenes) the level of disruption to financial services has thus far been minimal.”
On financial system health: “We were fortunate that Australia went into 2020 with a banking system in generally good health. We had been working for some years to position our largest banks in the top quartile of international peers from a capital adequacy perspective, and fortuitously they had achieved that positioning before the crisis struck. On an internationally comparable basis, our largest banks are operating with CET1 ratios in the order of 15-16 per cent, and capital within the broader banking system is at a historical high – and about twice the level heading into the 2008 crisis. Funding and liquidity positions were also stronger, and asset quality was good, reflecting a lot of supervisory attention in recent years.”
On the road ahead: “This crisis will almost certainly precipitate enduring change in the way society operates. The idea that we’ll employ some temporary measures and then everything will ‘go back to normal’ is therefore a dangerously naïve one on which to base our decisions. Flexibility and agility will be important – we have a long battle ahead.”
On the regulatory and supervisory landscape: “First, financial and operational resilience – the core of prudential supervision – will be the primary area of focus in the foreseeable future… Second, the post-2008 reforms will be properly tested, and inevitably we will find areas they can be improved…. Third, transparency will become even more important.”
What are the implications for interest rates and investors?
The Reserve Bank Governor’s more optimistic tone was somewhat reassuring today. He seemed satisfied that the Bank had done all it could to help cushion the economic blow from the pandemic, but appears prepared to do more (buy more bonds) if the recovery fails to gather momentum as the economy is re-opened.
Of course, the Governor remains focused on developments in Australia’s labour market. The Bank’s assessment of the economy is predicated on the number of hours worked by Australians. The Governor emphasised that “What I’m focused on is people getting their jobs and income. Mortgage repayments are entirely manageable if you’ve got a job and income.” But "The shape and timing of that recovery depends not only on when restrictions are lifted, but also on the confidence that Australians have about their own health and their finances,"
Improving jobs data from the Bureau of Statistics, SEEK and Indeed – albeit off very low levels – provides unemployed Aussies with some hope and lifts confidence.
But a lot of uncertainty will remain, thus impacting consumer behaviour, until a potential virus vaccine is found. In the meantime, government policymakers would be well advised to retain the large fiscal and welfare support necessary for Australian workers and businesses to survive and operate through these challenging times until the economy finds a firmer footing.
RYAN FELMSAN Senior Economist, CommSec
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RBA says downturn less severe than first appeared: CommSec's Ryan Feldman

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EXPERT OBSERVATION 
Australia’s three-decade run of near continuous economic growth is set to end, with treasury warning of a hit to growth of “at least” 0.5% in the first quarter of this year, potentially followed by a “prolonged downturn”.
If it came to pass, treasury’s preliminary assessment would most likely mean economic growth vanished and went backwards for several quarters, producing what is commonly known as a “<a href="https://www.smh.com.au/politics/federal/the-really-lucky-country-talk-of-recession-as-australia-takes-world-record-20170601-gwiiwl" target="_blank">technical recession</a>” – two quarters or more in which income and spending shrink.
Providing the <a href="https://treasury.gov.au/speech/opening-statement-march-2020-senate-estimates" target="_blank">assessment</a> to a Senate estimates committee on Thursday morning, treasury secretary Steven Kennedy said the COVID-19 coronavirus would take “at least half a percentage point” from economic growth during the current March quarter and more beyond that.
In recent quarters economic growth has been about half a percentage point.
Quarterly GDP growth
<a href="https://images.theconversation.com/files/318783/original/file-20200305-127918-160glbr.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/318783/original/file-20200305-127918-160glbr.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
Treasury’s preliminary estimate of a hit of at least half a per cent took into account only the direct impacts of the virus on tourism and education, and some exchange rate effects.
It did not take into account broader economic effects or the impact of the coronavirus on supply chains.
The half a percentage point hit to growth would come on top of a hit of 0.2% from the summer bushfires, most of which would be felt in the March quarter.
<hr>
 Read more: <a href="https://theconversation.com/support-package-gains-shape-as-gdp-turning-point-swamped-132969">Support package gains shape as GDP turning point swamped</a> 
<hr>
Dr Kennedy, a former nurse who retrained as an economist, stressed that the impact of the bushfires would extend well beyond the immediate hit to economic growth.
“Evidence from past episodes suggest bushfires can lead to long-lasting physical and mental health effects and destroy cultural heritage,” he said.
“Research by the University of Melbourne after the Black Saturday bushfires in 2009 found mental health problems continued for three to four years.”
The bushfires made clear the increased probability of such events in a world of climate change.
“The CSIRO predicts climate change will make bushfires more likely, as fire weather patterns worsen as a result of an increase in weather patterns with hot and dry winds and fuel becoming drier.”
Deeper, wider and longer lasting than SARS
As of Wednesday there had been 91,868 confirmed COVID-19 cases worldwide and 3,131 deaths, most in China. COVID-19 had spread to 77 countries.
When the virus first emerged in China in December, the treasury saw it through the lens of the 2002-04 Severe Acute Respiratory Syndrome (SARS) pandemic.
It was now clear COVID-19 would be different.
The impact of SARS took on a V shape, a relatively contained reduction in activity, mostly in Asia, followed by a quick bounce back.
The economic impact of COVID-19 is likely to be deeper, wider and longer when compared with SARS.
It will create more risk of a prolonged downturn, and fiscal support will be needed to accelerate the recovery of the economy, especially once the health and health management effects of COVID-19 begin to fade.
The first phase of the economic support package to be delivered next week would target assistance to the businesses and sectors most affected in order to keep people in jobs.
After that, support for aggregate demand (overall spending) would become more important.
“A very substantial part of the impact is actually confidence among consumers and the business sector because of the uncertainty,” Dr Kennedy said.
“Frankly, effective health management will be very important. The economy is actually quite solid. One of the key things will be to to explain to the community how well placed the economy is to manage such a short-term shock.”
The shock would last for some time but the economy would “recover on the other side”.
Keeping workers employed would be very important.<img src="https://counter.theconversation.com/content/133053/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
<a href="https://theconversation.com/profiles/peter-martin-682709">Peter Martin</a>, Visiting Fellow, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292">Crawford School of Public Policy, Australian National University</a>
This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/economic-growth-near-an-end-as-treasury-talks-of-prolonged-coronavirus-downturn-133053">original article</a>.
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Economic growth nearing an end as Treasury talks of prolonged coronavirus downturn: ANU's Peter Martin

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EXPERT OBSERVATION
As green shoots have clearly appeared in the property market, RiskWise Property Research has taken a retrospective analysis of lessons to be learned from the recent downturn.
1) Think long term and don’t seek quick wins. It’s easy to see Sydney and Melbourne carry a low level of risk and are the long-term winners when it comes to the property market. While we’ve had short-lived episodes of enthusiasm in areas such as Hobart and the mining towns in both Western Australia and Queensland, these areas are no longer in favour with owner-occupiers or investors (Hobart delivered a modest annual change in dwelling value of 2.6 per cent). Now we are seeing the Sydney and Melbourne markets starting to perform more strongly, which means that only the people who bought at the top of the market in 2017 and 2018 are seeing temporary reductions in dwelling values. People who are looking for ‘adventures’ in the property market are like gamblers and often find these escapades to be perilous down the track when it is too late to do anything about.
2) Taxation and regulatory changes carry very tangible risk to property investors. Investors should focus on purchasing dwellings that are suitable for families in areas which have a high owner-occupier ratio, particularly houses, as these are less subject to potential taxation changes.
3) High-rise units simply carry a higher level of risk. This is driven by areas which have oversupply of units, often flagged as Danger Zones. However, the newly emerging threat of construction defects and combustible cladding has added an addition layer of risk for investors. For the same amount of money investors can usually buy a house in the middle or outer rings which will present much less risk and is more likely to enjoy solid capital gains down the track due to the long-term appreciation of land values.
4) Capital growth should be the key driver for investor decisions, rather than cash flow. A RiskWise five-year analysis of the property market earlier this year demonstrated that high rental yields generally deliver low overall returns for investors. Our analysis proved that, over the medium to long term, low rental returns delivered significantly higher overall return (i.e. capital growth + rental return), while high rental returns delivered lower ones overall. What it means is people who invest in very affordable suburbs that carry a high level of rental return, with the expectation of strong overall growth, achieve exactly the opposite result. The analysis showed, under the assumption of a 20 per cent deposit, that low-rent houses would increase their net equity by 63.1 per cent. Conversely, high-return houses would increase their net equity by only 29.5 per cent. This means low-rent houses increased their equity by more than twice that of the high-rent ones.
5) Undersupply of houses in Sydney and Melbourne is a systematic issue. With high population growth in both these capital cities, undersupply of family-suitable dwellings, mainly houses and, to a lesser extent, townhouses will drive property values and is likely to create strong long-term growth in prices. What it means is supply has been unable to keep pace with strong demand. While there has been a large supply of units in high-rise buildings, these are generally unsuitable for owner-occupiers and are largely rental properties. This imbalance in dwelling construction has been a major contributing factor to housing affordability challenges, remembering that rental properties and owner-occupied ones are not fully substitute products. Overall, investors are more likely to benefit more from buying houses in the middle rings and the outlying areas of these cities, provided there are adequate transport solutions and access employment.
DORON PELEG is the CEO of RiskWise
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Five lessons from Australia's recent real estate downturn: RiskWise's Doron Peleg

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The Western Australia housing market took a turn for the worse over the last quarter with broad-based downgrades, according to the latest data from Moody's Analytics
They found, despite support from lower interest rates and the continued strength of non-rural commodity prices, dwelling prices remain in a slump after the mining boom.
The labour market in Western Australia has been comparatively weak for some time, with the growth in employment lower than the national average since 2015.
Plus, average weekly earnings contracted over the year to May, the second worst performance among states after the Northern Territory.
Given the subdued conditions, Moody's Analytics forecast is for the housing market is expected to continue declining in 2019, with the trough not likely until 2020, after which conditions will begin to pick up before a modest recovery in 2021.
<img src="https://www.urban.com.au/images/2019/10/28/WA%20Moodys%201.JPG" alt="">
Katrina Ell, Economist at Moody’s Analytics said: "Greater Perth’s house values are expected to fall 7.8% in 2019, building on the 1.8% drop in 2018.
"Mandurah is expected to experience the greatest fall in house prices this year, before stalling in 2020, while Perth Inner and Perth-North West are expected to perform the worst in apartments, which will have double-digit falls. Conditions will improve for both in the following year, but prices are forecast to still be below 2017’s in the medium term.
"Median rental values in Western Australia fell more than 20% peak to trough from November 2013 to September 2016, a sign of continued excess supply. Since then, rental values have remained broadly stable.
"A slow recovery in rental value over the next two years will help the housing market recover.
"Perth-North West, encompassing Joondalup, Stirling and Wanneroo, is representative of trends across Greater Perth. While apartment prices will likely remain weak over 2019-2020, house values will fare better, with less of a decline this year followed by a modest recovery in the next."
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