House price crash ‘a risk but remains unlikely’
Oliver said the turning tide against property prices reflect a “perfect storm” of factors including poor affordability, credit curbs, rising supply, reduced sentiment and a fall in foreign buyers.
Reminding readers that the threat of a property crash has been “wheeled out endlessly over the last 15 years or so”, Oliver said that a crash (which he defined as a 20 per cent or more fall in national average prices) is unlikely.
“Our assessment remains that a crash is unlikely [unless] we see much higher interest rates or unemployment (neither of which are expected) or a continuation of recent high construction for several years (which is unlikely as approvals are falling) and a collapse in immigration.”
Meanwhile, house prices in Perth and Darwin are bottoming out, and prices in Adelaide, Brisbane, Canberra and Hobart – along with regional centres – are likely to perform better despite still seeing some impact from tighter credit.
“Overall, we now expect national average prices to fall nearly 10 per cent out to 2020 which is a downgrade from our previous expectation for a 5 per cent national average fall,” Oliver said.