Sydney and Melbourne residential property prices are likely to bottom out by 2021, according to recent research by KPMG.
The study predicted that the total drop in Sydney prices for the entire downturn, which began in 2018, would be 12.9%. Melbourne’s slump, meanwhile, is projected to be smaller than Sydney’s, with the peak-to-trough slides tipped to be 4.5%.
Drops in Sydney prices would be greater than in Melbourne due to declining interest from investors, which will have more bearing in New South Wales (NSW), the study said. In 2016, investors were accountable for nearly 60% of NSW property purchases.
Looking into the forecast for houses, KPMG predicted that Sydney real median prices, on average, are set to decline by 4.3% in 2019, further drop by 1.3% in 2020, and then record growth of about 3.5% in 2021.
Melbourne real median house prices, on the other hand, are anticipated to decrease by 2% this year, and then turn around to positive growth of around 3% and nearly 5% for 2020 and 2021, respectively.
KPMG Chief Economist Brendan Rynne said that stricter lending policies have caused the declines in prices up until now, but these tight lending standards may start to soften over the next few months, according to a report by news.com.au.
KPMG also predicted that the Labor Party’s proposed reforms to negative gearing will not affect the availability of rental homes for a long time, if ever the party wins the election.
