Invest
Oversupply predicted to fuel 20% property declines
Sydney and Melbourne could experience a drop of up to 20 per cent in property prices in some areas as early as next year, given the supply of apartments coming on stream, an Australian economist has predicted.
Oversupply predicted to fuel 20% property declines
Sydney and Melbourne could experience a drop of up to 20 per cent in property prices in some areas as early as next year, given the supply of apartments coming on stream, an Australian economist has predicted.
AMP chief economist Shane Oliver says prices in Australia’s hottest property markets are likely headed for citywide falls.
“My base case would be at some point in the next couple of years, prices will fall 5 to 10 per cent in Sydney and Melbourne,” Mr Oliver told Nest Egg.
“It probably requires a turn-up in the RBA’s interest rate cycle. I don’t think the banks are enough to do that on their own.”
However, with a steady supply of apartments still coming on stream in specific areas across the two cities, the price pain should be more acute in some suburbs than others.
Mr Oliver said apartment-saturated suburbs could see declines of up to 20 per cent.
“I think sharp falls of 15 to 20 per cent could be more constrained to suburbs with lots of cranes, and more constrained to apartments as opposed to houses. In Melbourne, that apartment supply seems to be more concentrated to the inner city, whereas in Sydney it’s in those satellite centres like Chatswood and Parramatta,” he said.
“But if you're looking at standalone houses in the eastern suburbs of Sydney or the most of the suburbs of Melbourne, or out at Campbelltown and the Hills district, you’re probably looking at price declines, when they start to kick in at the start of next year, contained around 5 per cent.”
While Melbourne remains more at risk given its burgeoning apartment oversupply, those price declines could be followed by stabilisation if both cities act on housing affordability, Mr Oliver said.
“If state governments are serious about improving the affordability issue, and particularly expanding supply on a fundamental basis, that should help keep house prices down in the years ahead which should in turn gradually help improve affordability.”
RELATED ARTICLES
Property
Cost, red tape and capital: why Australia’s housing pipeline is shrinking — and how to rebuild it
Australia’s housing pipeline is being choked by a toxic mix of escalating input costs, regulatory drag and tighter finance. The result: mid-market projects stall while luxury builds proceed, pushing ...Read more
Property
Start 2026 strong: Turn property advice into a data-driven advantage
In 2026, property professionals who industrialise goal-setting and risk management with data and AI will capture outsized client value. The playbook is shifting from intuitive advice to measurable, ...Read more
Property
Solar for renters isn’t just social policy — it’s a new operating model for residential property
Queensland’s Supercharged Solar for Renters program, backed by the REIQ, reframes the ‘split incentive’ that has stymied energy upgrades in rentals. With rebates of up to $3,500 per property and joint ...Read more
Property
Holiday towns as assets, not postcards: How to invest where the beach meets the balance sheet
Summer seduces capital to the coast, but the smart money treats holiday towns like operating businesses, not lifestyle trophies. Demand is seasonal, regulation is variable, and returns depend on ...Read more
Property
First Home Supply: a $10b bet on 100,000 keys — and a reshaping of Australia’s build-to-sell pipeline
Can $10 billion translate into 100,000 front doors for first-time buyers — without overheating costs or stalling on approvals? The new First Home Supply program signals a pivot from demand-side ...Read more
Property
Navigating the crunch: A 2025 case study of Australia’s housing market and the operators who outperformed
Australia’s 2025 property market was defined by a stubborn supply squeeze and cost-of-living pressure—tempered by rate cuts and targeted incentives. Yet a cohort of developers, lenders and agencies ...Read more
Property
Australia’s mortgage rebound: a 19% surge that reshapes pricing, risk and distribution
New APRA figures show new home lending jumped 18.9% in the September quarter year-on-year, signalling a demand recovery despite elevated rates. The upswing intensifies a three-way contest between ...Read more
Property
Short stays lose their shine: Why Australian investors are quietly pivoting to long‑term rentals
Australian buyers once lured by short-stay yields are shifting capital to long-term rentals. The driver isn’t sentiment; it’s operating economics under pressure from platform concentration, compliance ...Read more
Property
Cost, red tape and capital: why Australia’s housing pipeline is shrinking — and how to rebuild it
Australia’s housing pipeline is being choked by a toxic mix of escalating input costs, regulatory drag and tighter finance. The result: mid-market projects stall while luxury builds proceed, pushing ...Read more
Property
Start 2026 strong: Turn property advice into a data-driven advantage
In 2026, property professionals who industrialise goal-setting and risk management with data and AI will capture outsized client value. The playbook is shifting from intuitive advice to measurable, ...Read more
Property
Solar for renters isn’t just social policy — it’s a new operating model for residential property
Queensland’s Supercharged Solar for Renters program, backed by the REIQ, reframes the ‘split incentive’ that has stymied energy upgrades in rentals. With rebates of up to $3,500 per property and joint ...Read more
Property
Holiday towns as assets, not postcards: How to invest where the beach meets the balance sheet
Summer seduces capital to the coast, but the smart money treats holiday towns like operating businesses, not lifestyle trophies. Demand is seasonal, regulation is variable, and returns depend on ...Read more
Property
First Home Supply: a $10b bet on 100,000 keys — and a reshaping of Australia’s build-to-sell pipeline
Can $10 billion translate into 100,000 front doors for first-time buyers — without overheating costs or stalling on approvals? The new First Home Supply program signals a pivot from demand-side ...Read more
Property
Navigating the crunch: A 2025 case study of Australia’s housing market and the operators who outperformed
Australia’s 2025 property market was defined by a stubborn supply squeeze and cost-of-living pressure—tempered by rate cuts and targeted incentives. Yet a cohort of developers, lenders and agencies ...Read more
Property
Australia’s mortgage rebound: a 19% surge that reshapes pricing, risk and distribution
New APRA figures show new home lending jumped 18.9% in the September quarter year-on-year, signalling a demand recovery despite elevated rates. The upswing intensifies a three-way contest between ...Read more
Property
Short stays lose their shine: Why Australian investors are quietly pivoting to long‑term rentals
Australian buyers once lured by short-stay yields are shifting capital to long-term rentals. The driver isn’t sentiment; it’s operating economics under pressure from platform concentration, compliance ...Read more
