No longer will the national economy be able to rely on the housing sector for momentum post-commodities boom, according to a chief economist.
Housing supply will meet demand by the end of 2016 as the market cools and reaches a balance, HSBC chief economist Paul Bloxham has said.
Mr Bloxham made the prediction in an economic briefing on Tuesday, where he said that the “impact of property is waning”, according to a report in the Australian Financial Review.
Mr Bloxham said the housing sector’s contribution to the national economy will be minimal in 2016 and beyond, as construction fails to reach levels achieved in the previous four years.
"2017 will drag. Housing construction will not be a contributor,” he said.
However, the effect of the changes is likely to manifest as a correction of the market, as opposed to a downturn.
"The housing boom, which had been the first stage of the rebalancing act, appears to be cooling, but the services sectors have now taken the 'growth baton' and are driving job creation."
He added: "But there is not much risk of a significant downturn in the housing market […] we are just closing the gap."
Mr Bloxham’s predictions continue a recent string of commentary over a weakening housing market in 2016.
Last week AMP’s chief economist Shane Oliver predicted that a stretched Sydney market could see prices flatlining over the coming year and then entering negative territory beyond that.
Fitch Ratings predicted that house price growth would sit at two per cent in 2016, down from the four per cent forecast for 2015.
Director of wHeregroup Todd Hunter predicted that an increasing supply of new housing stock in Sydney’s outer suburbs is set to create headaches for existing landlords already struggling with record-low rental yields.