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Australia’s housing market faces headwinds as supply likely to outpace demand, analysts say
- The highly infectious Omicron strain of Covid-19 and restrictions on foreign homebuyers – made up largely of Chinese investors – may also weigh on the market
- Residential prices in Australia rose to a historic high in November, surging 22.2 per cent from a year ago, according to an analysis by CoreLogic
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Australian home prices are likely to slow down or even decline as supply is poised to outstrip demand this year, according to analysts.
The highly infectious Omicron strain of the Covid-19 pandemic and various restrictions on foreign homebuyers – made up in large part by Chinese investors – will also weigh on the housing market.
Residential prices in Australia rose to a historic high in November, surging 22.2 per cent from a year ago and adding about A$126,700 (US$90,278) to median home prices, according to an analysis by CoreLogic.
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From November 2019 to November 2021, home values increased by 23.8 per cent despite the pandemic, as the nationwide vacancy rate fell to a decade low of 1.6 per cent in October, according to the French investment bank Natixis. The trend is unlikely to hold.
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“The housing boom in Australia is turning the corner with a slowdown in price growth, said Kohei Iwahara, senior economist, Japan and Pacific, at Natixis CIB Asia Research. “The tailwinds that supported the market are changing … Furthermore, if border controls and foreign investment regulations remain tight for a prolonged period, then housing prices could decline.”
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