According to economists from investment bank UBS, low interest rates and population growth will lead to a slow growth in housing prices, rather than a drop or a crash.
This is good news for homeowners, as it means the predicted ‘top’ in April this year may no longer apply.
UBS noted a drop in dwelling unit commencements (19 per cent) and building approvals (20 per cent in May) and a sharp fall in approvals for high-rise units.
Annual building commencements will fall from about 202,000 to 195,000 next year and 188,000 in 2018.
This slowdown in the apartment sector and housing construction in general should mean that the value of existing dwellings will rise slowly rather than fall.
Deloitte Access Economics has backed the UBS economists noting that a slower pace of home building could lead to a potential economic headwind.
“The pace of home building is set to shrink further amid increasing evidence that gravity may soon start to catch up with stupidity in housing markets,” said the Deloitte Access report.
What do you think? Is the housing market going to continue to rise? How would a housing crash affect you?
Related articles:
Household debt at an all-time high
Housing affordability not an issue
Rent costs may bust pension system
