A SHARP fall in Sydney unit prices may be matched on the Gold Coast where apartment values could fall by 6 per cent, according to ANZ research.
The bank has released a report after modelling the impact of a 10 per cent decline in unit prices in Sydney, Melbourne and Brisbane to gauge price falls in markets with an oversupply of units.
Australia’s stock of yet-to-be-completed apartments stands at about 220,000, worth a record $35 billion.
However Gold Coast property market researcher Colleen Coyne says the Coast does not have a significant oversupply and questioned whether such a problem would develop.
The ANZ report researchers used data including the quarterly change in unit price and house price growth and the unemployment rate in each city between 1980 and 2016.
The report finds strong flow-on effects to Melbourne and Brisbane from a price drop in Sydney, although it expects the impact to be short-lived in Melbourne.
The Gold Coast was not included in the modelling, however ANZ head of Australian economics David Plank said he expects the impacts on the city and Brisbane to be similar.
The research models a 6 per cent price drop for Brisbane if Sydney prices plunge by 10 per cent.
“One would assume the impact on the Gold Coast and Brisbane would be similar,” he said.
Mr Plank said Sydney has Australia’s largest housing market and its price movements reflect not only local drivers but also shifts in investor sentiment.
He said the modelling assumes all things remain equal and does not take account of possible policy changes due to an apartment market downturn.
Ms Coyne said the Gold Coast market, although not isolated from market conditions in southern cities, has its own drivers.
“It is flawed logic to not give enough emphasis to the dynamics of the local market,” she said.
“We are not at a point where we can see a significant oversupply of units on the Gold Coast. “People need to ask how many development applications will not proceed.”
Ms Coyne said the Gold Coast has a rental vacancy rate of around 2 per cent.
The research also follows consistent warnings from the Reserve Bank over the role property investors play in propping up housing prices.
RBA governor Philip Lowe made clear the central bank’s concerns this month, noting that borrowing levels among investors had “picked up over recent months” while “a considerable additional supply” of east coast apartments was coming over the next few years.