Sydney and Melbourne housing markets may have hit their peak

Adam Smith 26 April 2017

graph hand1House prices are likely to cool in Sydney and Melbourne, investment bank UBS has claimed.

UBS has forecast the surging property markets of Sydney and Melbourne have hit their peak.

News Corp reports that in a note to clients, the investment bank said after a weekend of lower auction clearance rates, the cities' housing markets are likely to decline.

“We are ‘calling the top’, but stick to our forecasts for commencements to ‘correct but not collapse’,” UBS economists wrote in the client note.

The note comes after the national auction clearance rate fell from 73.9% the week before to 72.1%. Melbourne's clearance rate of 76.8% led the nation, while Sydney followed with a clearance rate of 75.8%.

The bank noted that while the RBA had kept rates steady, mortgage rates were rising and home buying sentiment had “collapsed to a record low”.

“Looking ahead price growth has likely now peaked, and we see a moderation ahead amid record supply and poor housing affordability,” the note said.

The bank forecast prices will “cool” but not crash, while housing activity should “correct sharply”.

Image: Shutterstock

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