Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Wednesday, 18 March 2015

BIS Schrapnel: Sydney, Brissie markets to take off

Guess who's back?

Market analysts and forecasters BIS Shrapnel are back with another headline-grabbing forecast.

They see the Sydney property market adding price growth of 20 percent over the next two years with prices "set to take off" in Brisbane by 14 percent over the same time horizon.

However, BIS see growth slowing dramatically in Melbourne, anemic growth of just 1 percent in Adelaide in the next year, and a slight fall in Perth prices. 

Unsurprisingly, it's mostly about Sydney and Brisbane, reports The Australian:

"The soaring Sydney property market will achieve growth of 20 per cent over two years to send the median house price well above $1 million, new research suggests.

Prices are also set to take off in Brisbane, but growth will be much more subdued in Melbourne and Adelaide, and prices will fall in Perth, according to forecasts from BIS Shrapnel.

The economic analysts said there are housing shortages in Sydney and southeast Queensland, and while housing construction activity has lifted, there is limited scope for a long run of growth in construction.

Sydney house prices have grown by almost 14 per cent in the year to February, according to Australian Bureau of Statistics data, and BIS Shrapnel expects annual growth of 13 per cent for the 2014/15 financial year, which would take the median price just past $1 million.

A further seven per cent rise is forecast for 2015/16.

Brisbane prices are expected to post six per cent growth in the current financial year and eight per cent growth in 2015/16, taking the median price close to $600,000.

“Activity has already found a momentum of its own which is set to continue for another two years.”

Slow markets

However, BIS expects other markets to be slow.

Melbourne is expected to post much slower price growth of three per cent in 2014/15, and just two per cent in the following 12 months.

Adelaide’s market is also set to slow, with growth of one per cent in the current financial year and two per cent in 2015/16.

As the mining boom slows, Perth will experience a fall in prices, with BIS Shrapnel forecasting a one per cent drop this year and a two per cent fall in 2015/16."

The Wrap

We can quibble over the quantum of price gains or upside/downside risk, but the relativities and the thrust of which markets are likely to outperform I agree with, as outlined here previously.