For the second consecutive year, Melbourne’s housing market is tipped to slow after years of strong growth.

According to data from the Domain Group, the median house price in Melbourne rose about 10% this year. However, experts predict this will soften to about 5%, at best, in 2017.

The projected dip in house price growth spells more bad news for prospective first-home buyers who’re struggling to gain a foothold in Melbourne. The city has outpaced the rest of Australia in terms of house price growth, in large part due to strong migration to the city.

Forecasts for Melbourne’s apartment market are more mixed, with some experts projecting a minor price increase and others a price decrease. Meanwhile, the Domain Group’s state of the market report forecasts a price increase of about 5% for Melbourne’s house prices and about 3% for Melbourne’s unit prices.

“It’s going to be a much slower year for the market, and we’re coming into [the] realisation this economy is now generally struggling,” said Dr. Andrew Wilson, Domain Group’s chief economist. Moreover, the potential for further house price growth would be constrained by very low income growth, if any, next year.

According to Paul Bloxham, HSBC’s chief economist, HSBC expects house prices to rise by 2% to 4% next year, and apartment prices to fall between zero and 5% next year.

Noting a fall in the renminbi against the Australian dollar, Bloxham said our house prices had become more expensive for those buying with Chinese currency over the past year. “We think that is going to potentially impinge upon the strong foreign interest we’ve seen in the housing market,” he said.
 

Collections: