BOQ chief economist Peter Munckton shares five reasons to impact Coast property price growth in the next year

A chief economist has shed light on the five reasons that could slow down the Coast’s property price growth. SEE THE LIST

Bank of Queensland economist Peter Munckton.

House prices on the Sunshine Coast could soon stop rising despite the region reaping the benefits of an economy that was "absolutely gunning it", according to a chief economist.

Bank of Queensland chief economist Peter Munckton said affordability was only one major factor that could soon prompt potential homebuyers to turn their backs on the Coast, forcing prices to drop.

"On the Sunshine Coast, the economy is absolutely gunning it right now," he said. "(But) house price growth even on the Sunshine Coast will be slowing.

"At some point in time house prices will get to a point where people will just say 'I can't afford buying on the Sunshine Coast. I'll look somewhere else'."

Mr Munckton was speaking alongside BDO partner and tax industry commentator Mark Molesworth at the BDO federal budget Breakfast at Maroochy Surf Club on Friday morning.

The economist used parts of his speech to outline the factors that could influence the housing market on the Sunshine Coast and the rest of the country.

Property prices could soon stop growing, according to chief economist Peter Munckton. Picture: Lachie Millard

They included:

Confidence in the economy

Mr Munckton said the Coast's high job vacancy rate was "a fantastic indicator" for a healthy economy.

"If there are jobs around people will spend and if businesses are happy to create jobs that means they are happy that the business is going to be around," he said.

Mr Munckton remained optimistic about the future of the local economy.

"In the next one to two years, the economy is still going to be good," he said.

Interest rates

The Reserve Bank earlier this month left interest rates at the historic low level of 0.1 per cent.

Mr Munckton said low interest rates were a big driver behind high property prices.

However, he said interest rates were unlikely to remain low, meaning price growth could slow down.

"Interest rates are going to be less positive," he said.

High demand for housing and low availability was driving house prices up, according to chief economist Peter Munckton. Picture: Lachie Millard

Ease to get a loan

Mr Munckton said regulators looked at housing market performance and credit growth when making lending decisions and getting a loan was easy at the moment, meaning real estate prices were up.

"It might not get any easier," he said.

However, he stopped short of predicting if lending conditions would tighten in the near future.

Demand for housing

The federal government has projected that over the next four years to 2023-24, Queensland would gain 86,000 residents - with the Sunshine Coast being a major beneficiary of the interstate migration.

"Part of that is people have always loved the Sunshine Coast, they've always loved coming here," Mr Munckton said.

"But also a big part of it is that less people are leaving the Sunshine Coast."

However, he said that growth was unlikely to remain as strong, which would lead to a drop in demand for housing in the near future.

"Sunshine Coast will still get population growth, but you won't get the same amount of numbers you've seen over the last year or so," he said.

Housing availability

The Real Estate Institute of Queensland's latest rental vacancy report, released last April, showed rates across the Sunshine Coast were as low as 0.4 per cent.

Mr Munckton said housing availability was particularly low on the Sunshine Coast with the region having experienced rapid growth in population.

"Places selling is actually pretty quick here," he said.

"That's sort of telling me that supply is struggling and again that's no surprise given the big shift in population growth over the last one two years here.

"Demand growth will be slowing and there will be more houses being built, so you will get slowing in demand and some rise in supply."

Originally published as BOQ chief economist Peter Munckton shares five reasons to impact Coast property price growth in the next year