House Price Growth Tipped to Slow

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Rising unemployment and weak consumer confidence are likely to put the breaks on rapidly rising house prices, a real estate data firm predicts.

Consulting analyst with Onthehouse.com.au, John Edwards, says a 15 per cent rise in Sydney house prices in the past 12 months is unlikely to be repeated in 2014.

A slide in consumer sentiment in the past few months, and a lack of job security due to rising unemployment, would make people less inclined to buy property in the next few years, he said.

"There is a natural limit on the maximum value of an asset at any point in time and that is the value at which the masses deem it to be unaffordable," he said.

"Sydney's property market, which is a leading indicator for the national market, has consistently outperformed wages growth which continues to push property out of reach of buyers."

Capital city house prices have risen much more quickly than wages growth, taking Sydney's average house price to around $780,000.

Mr Edwards expects price growth in Sydney to slow to around four per cent a year over the next half decade, which is closer to expected wages growth.

The rest of the country should follow suit, he said, with average growth of three per cent in Melbourne and Perth over the next five years.

But the slowdown may be a while away in some areas, Mr Edwards said.

"The good news for investors is that while house price growth for the balance of the year in Sydney will slow from here, other states and capital cities are probably yet to reach their peak value for this growth period," he said.

By Evan Schwarten

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News and Industry press material produced by Sourceable staff...

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