Housing Oversupply Tipped to Cool Markets

The normally subdued winter property market has been anything but chilled – in fact Sydney and Melbourne continues to be what  can only be described as over-heated. With Melbourne joining Sydney reporting a median house price over $1 million – these two cities are rapidly approaching New York level of property prices.

Sydney properties average only 26 days on the market with Melbourne close at 31 days. Added to this has been an ongoing fall in listings with 13 percent fall in Sydney and 11 percent in Melbourne. These issues combined with the historically low interest rates have sustained the market activity.

However BIS Shrapnel reports that falling population growth matched to a construction boom with 210,000 starts in 2014/2015, will see an oversupply of housing in both Victoria and Qld in the near term with Sydney tipped to follow in the next couple of years.

So while low interest rates and offshore investor demand have fed the current boom – it would appear that the market itself may be able to do what both the RBA and APRA have so far failed to achieve.