Maria Papa
Maria Papa

Australia’s property market is set to cool in 2018 as national housing prices are officially in decline. There are fewer investors as lending becomes stricter for investor loans. With fewer investors in the market, we are now seeing more first home buyers entering the market. Below are my fearless predictions based on the research I have gathered and analysis I have read from various sources.

1. Apartment prices are expected to fall but the housing market is not expected to crash

Apartment prices are expected to fall in almost all capital cities by 2020 according to a QBE report. This is due to the oversupply of too many new developments. The oversupply though is expected to be absorbed by the market especially in Victoria and NSW as population growth is still going to be strong.

On the other hand, ANZ predicts property growth will slide to 1% before rebounding in 2019. According to ANZ, “national housing price growth will continue to slow in 2018, though only moderately and without falling into negative territory”.

2. Interest rate expected to rise

There are also expectations that interest rate will rise by 50 points from the current 1.5% to 2% while some predict rates are more likely to go nowhere this year. Any rise in interest rate will affect the rate of growth of property prices all across the country and RBA is keeping a very close eye on the housing market.

3. Lenders are becoming more prudent

Securing home finance has become much more difficult as lenders have become more prudent in their lending. In the last 12 months, bank’s pricing and policy changes have continued to disrupt the Australian property market. Lenders are becoming more prudent and fussy on who and what they lend on especially with investors and investment properties.

A few of the major changes I have seen are the following

  • Interest rates are higher for investment property loans by .35%
  • Interest only loans also attract a higher rate compared to principal & interest repayment
  • Most lenders have pulled out on home lending to overseas buyers due to reports of fraud
  • Higher servicing requirements. We now need more income to service the same amount of loan
  • A bigger deposit requirement as property prices have gone up

2018 is the year when getting a mortgage will become harder as APRA tries to curb the growth in investor loans and interest only loans.

4. First home buyers

With investors stepping aside and the state government’s stamp duty concessions for first home buyers, we are now seeing more of the young segment of the population getting into the market. In Victoria, qualified first home buyers are exempted from stamp duty for purchase up to $600,000. They also qualify for the first home owner’s grant of $10,000 if purchasing in Metro Victoria and $20,000 if purchasing in Regional Victoria.

In NSW, first home buyers qualify for the stamp duty exemption for purchases up to $650,000 and concessions for purchases up to $800,000, both for new and established owner-occupied homes. For new home purchases, first home buyers qualify for the first home owners grant of $10,000 if they purchase at $750,000 or less.

The year 2018 will be challenging for the Australian home buyer. Now is a good time to speak to a finance broker to educate, help and guide you through your home buying journey.

This article is for general information only and should not be considered personal financial advice. Before making a financial decision, you should seek independent advice from a mortgage broker, financial planner or an accountant.

Maria Papa is a senior finance expert specialising in home loans, investment loans, self-employed loans, Lo Doc loans, car loans, personal loans and loan protection. She has offices in Sydney and Melbourne. If you have questions, call Maria on 0430 144 008 or email her at

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