Apartments Set To Become New Dream as House Prices Surge

The “great Australian dream” of owning one’s own property will look more like an inner-city apartment than a suburban acre block as house prices are expected to surge in Australia’s major cities over the next three years.

A glut of apartments is likely to see unit prices fall, contributing to an overall improvement in home affordability, QBE’s Housing Outlook 2017-20 forecasts.

For most cities, the report cites increased demand and limited supply as the main drivers.

QBE Lenders Mortgage Insurance chief executive Phil White said that while unit prices will soften, the sector will play a growing influence on the nation’s property market over the coming decades.

“With so many Australians priced out of the housing market, the Australian dream of owning property is increasingly turning to high and medium density apartments,” he said.

“Units contribute to a greater share of the market as changing lifestyles and affordability dictate property choices.

“Encouragingly, that dream should become a reality for more Australians, with improving affordability overall.”

Units now account for 46 per cent of all residential construction across the country.

White said recent low affordability in Sydney and Melbourne should stop purchasers from taking larger mortgages and bidding up prices even more, but with more lending restrictions impacting investors, it could be good news for owner occupiers as they should find less competition from investors.

First home buyer loans declined by less than 1 per cent in 2016/17. Overall signs of strengthening demand for first home buyers are emerging with 13 per cent more loans approved to first home buyers to the three months to July 2017 compared to the prior year.

White said around 6.5 million people will need to be housed over the next 15 years.

“The forecast population growth raises questions about whether our property market will have us on track to meet short, medium and long-term population challenges.