In contrast, house prices in Sydney are forecast to weaken further amidst higher interest rates and deteriorating affordability. PMI predicts median residential property prices to drop 2.1% to $517K this year and further 3% to $495K in 2008. Turnaround in prices is not expected to start until 2009, where median house price will see a 2% growth according to the report.
The outlook for Melbourne is slightly better. PMI expects to see a 3% increase in median house prices to $370K for the year, however, growth will slightly moderate to 2% over the next two years.
Ian Graham, Chief Executive Officer of PMI Australia, says, "The property market in Australia is slowing to a more moderate pace, as we expected. We see this continuing into 2008, when lower interest rates and improving economic conditions could bring a period of stronger price growth."
While the resources boom continues to drive the economies of WA and the NT, greater return on investments are expected in these markets.
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