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Australia’s housing markets are expected to cool from 2018 for a few years, according to the latest CoreLogic-Moody’s Analytics Australian Home Value Index Forecast.

The index forecasts a small fall of 0.6% nationally in 2018 with Sydney, the big property market performer, down 1.4% and another 0.9% in 2019.

“Prices (in Sydney) are set for a minor correction,” says economist Emily Dabbs at Moody’s Analytics.

“Although we do not expect a steep decline in prices, Sydney’s property market will likely stagnate through to 2020 as interest rates begin to normalise.

“The degree of correction will likely be uniform across apartments and detached houses.”

Sydney house prices have increased by 20% over the last 12 months and are up by more than 100% since the GFC in 2009.

The latest CoreLogic-Moody’s forecasts show detached-home values falling in Sydney by 1.4% in 2018, while apartment prices will likely drop 1.2%, as this chart shows:

In Melbourne, the other housing hot spot, the property market will also ease in 2018.

“But contrary to popular belief, the correction will likely be more severe in detached housing than apartments,” says Dabbs.

CoreLogic-Moody’s says apartment values will rise 3.4% in 2017 but a period of stagnation will follow through to 2020.

Melbourne detached-home values are expected to rise 7% in 2017, followed by a steady decline through to 2020, as this chart shows:

CoreLogic-Moody’s says slower price growth in apartments in Melbourne relative to detached houses suggests buyers are already pricing in an expected oversupply.

Perth’s housing market is showing signs that the worst is behind.

CoreLogic-Moody’s forecasts a 2.8% gain in detached housing for 2017, after a 4.1% fall last year.

“The downturn in mining investment continues to weigh on Perth’s housing market, but the recent rally in key commodity prices suggests that the fall is over,” says says Dabbs.

“However, Perth’s housing market is unlikely to rebound sharply because commodity prices will remain well below the levels experienced during the boom in 2011.”

The CoreLogic-Moody’s forecasts for houses in detail:

And for apartments:

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