What’s in store for 2020? Housing boom or recession? Finder’s panel of economic experts weighs in.
2019 was a tumultuous year for the economy, with three cuts causing the cash rate to tumble to a record low of 0.75%. With borrowing now cheaper than ever and house prices surging in Australia’s eastern states, what’s in store for 2020?
Finder’s monthly RBA Cash Rate Survey is the largest survey of economists and property experts in Australia. Every December, we ask our panel of over 40 leading economists for their prediction for the Australian economy over the coming year. This time, we asked them about the likelihood of 12 different scenarios playing out in Australia in 2020 covering the cash rate, housing market, jobs and employment, the Australian dollar, retail, international trade and the likelihood of a recession. There are the economists’ predictions for the Australian economy in 2020.
Expectations for the housing market look promising, with 52% of experts expecting house prices to fully recover to above pre-decline levels in 2020. This compares to only 12% of experts who expect house prices to fall. Mortgage defaults, often seen as an early sign of trouble in the housing market, should remain steady. 76% of experts thought it was unlikely Australia would see a rise in defaults in 2020.
The federal government finally announced the launch of one of its key election promises – a mortgage guarantee scheme for first home buyers. Economists were skeptical of its impact, with a significant 90% of respondents who weighed in on this question saying it would have no significant impact on the market.
Capital city/regional centre*
Rest of state
The government’s scheme limits the purchase price of Sydney properties to $700,000 which won’t cover much in Australia’s most expensive market. Limits for other areas are similarly low. This, combined with the fact that the scheme is limited to 10,000 applicants, means it won’t have much impact on the market.
Finally, experts were asked which would be the most promising city in which to purchase a property in 2020. Brisbane and Melbourne came out on top, sharing 44% of the overall vote.
The future for the jobs market looks grim, with 64% of economists saying it is likely that employment will fall. However, the meagre wage growth we have seen recently may not worsen – 76% of experts said wage growth was unlikely to slow further in 2020.
New car sales are an oft-cited barometer of economic health. While we’ve seen some dramatic drops in the volume of new car and ute sales over the last couple of years, experts were divided as to whether sales will improve next year. 48% of economists said it was likely that we’d see further declining sales in 2020, while 52% said this was unlikely.
General retail sales have also been falling, with the Australian Retailers Association indicating that December could see the weakest Christmas spending in over 10 years. However, economists are feeling optimistic here – 67% of them expect retail sales to recover next year.
Hopes for a final US-China trade deal remain strong, with 64% of experts slotting that into the “likely” category.
This is significant, as the fate of the US-China trade deal was cited as economists’ number one economic concern in August this year, taking 27% of the total vote – with Australia-China trade itself coming in third at 14%.
A further drop in the Australian dollar was considered very probable, with 79% of economists saying this was either likely or very likely.
Following comments from the RBA that quantitative easing (QE) could well be introduced if rates fall to 0.25%, 46% of experts said it was likely we’d see easing in 2020. It must be noted here that this is an increase from the 31% who said QE was likely in October and the 19% who said the same thing in September. This combined with the 73% of economists who think a 0% cash rate is unlikely, means that the RBA is all but certain to introduce QE in 2020 if the next rate cut doesn’t do the job.
Finally, a recession looks increasingly unlikely, with 89% of experts not expecting an economic decline in 2020. This contrasts strongly with Finder’s Consumer Sentiment Tracker, a simultaneous survey of the Australian public, which shows that one in two Australians expect a recession in 2020. Who will turn out to be correct, economists or the public? Watch this space.
Delay in billion-dollar City Deal a ‘cruel blow’ to Queensland recovery
The COVID-19 pandemic has put a plan to direct billions of dollars towards south-east Queensland projects over the next 20 years on hold.
The plan would commit local, state and federal governments to fund specific areas to cater to a population that will grow by 1.9 million people in the next two decades.
The Property Council of Queensland and the Committee for Brisbane described the delay to 2021 as “a cruel blow” for south-east Queensland, where citizens “deserved better”.
Queensland Property Council executive director Chris Mountford questioned the wisdom of delaying the funding plan.
“To be fair, we would have expected a few months’ delay on the basis that COVID-19 has had an impact, but to simply kick the can into next year seems too much of a delay,” Mr Mountford said.
He said other states were doing a better job of locking in private-sector investment as part of their economic recovery plans.
“Queensland is really slow out of the gate on this front. We are not seeing much of the critical role that private investment will need to play in that,” he said.
“I think if they were still negotiating the Western Sydney City Deal, I am fairly confident the NSW government would not be tolerating a pause.
“They would more likely be saying, ‘we want the investment faster because we want that investment sooner’.”
Queensland Treasurer Cameron Dick rejected suggestions Queensland’s economic recovery was lagging behind other states.
“The Queensland economy is actually thrashing New South Wales,” Mr Dick said.
“We were the only state to record a decline in our unemployment rate last month, and recent transaction data from the Commonwealth Bank shows Queensland private-sector spending has recovered faster and higher than any other state.”
Mr Dick said Queensland was able to attract the $2 billion Forest Wind renewable power project in Wide Bay, the $2.1 billion Dexus redevelopment of Brisbane’s Eagle Street, and the $1.5 billion Valeria coal mine.
“The reality is that the SEQ City Deal would do nothing to improve these numbers in the COVID environment because it’s about projects that only deliver years away,” Mr Dick said.
“This includes things like the 2032 Olympics, a process which is currently on hold given the IOC has delayed the 2020 Olympics.”
Cities Minister Alan Tudge signed a statement of intent in Brisbane on March 15, 2019, with Queensland’s then-treasurer, Jackie Trad, and former Brisbane lord mayor Graham Quirk, who was chair of the South East Queensland Council of Mayors at the time.
The formal South-East Queensland City Deal was expected to be signed in mid-2020, before the COVID-19 pandemic struck.
However, a decision to delay planning was agreed by all three levels of government, according to a joint statement released on Tuesday.
“The Australian Government, Queensland Government and Council of Mayors (SEQ) have agreed to extend the negotiation of the SEQ City Deal into 2021 while we focus on recovery from the COVID-19 pandemic,” the statement reads.
“As governments focus on the COVID-19 impacts it will be important to assess new priorities in the context of the recovery at a later date.
“This will ensure all levels of government have greater clarity of the impacts on the SEQ region and that new and emerging priorities are considered to ensure we have a solid foundation for our future SEQ vision.”
The email was signed by Mr Tudge, Queensland Treasurer Cameron Dick and Brisbane lord mayor Adrian Schrinner, chair of the Council of Mayors (SEQ).
Mr Mountford said the effect of the coronavirus pandemic on the state’s economy “should provide added impetus to a City Deal, now”.
He and Committee for Brisbane chief executive Barton Green said in a joint statement an SEQ City Deal should be the centrepiece of recovery.
“The decision to postpone all the hard work done to date is confusing and disappointing.”
There are seven signed City Deals in place throughout Australia: Townsville, Launceston, western Sydney, Darwin, Hobart, Geelong and Adelaide.
The statement from the Property Council of Queensland and Committee for Brisbane asked governments to reconsider this decision.
“Deliver on the promises made to south-east Queensland residents to fund and prioritise City Deal projects that will support our growth and our economy.”
This article is republished from www.brisbanetimes.com.au under a Creative Commons license. Read the original article.
Sunshine Coast remains a standout market during COVID-19: Hotspotting’s Terry Ryder
The key message for property investors right now is that there are many growth markets across Australia.
There’s a tendency in mainstream media to extrapolate the situations in Sydney and Melbourne to the whole nation. If the big cities are in decline, then Australian real estate is in decline, according to news media.
This is seldom true – and it’s certainly not the case right now. Some of our smaller capital cities are pumping strongly and, in particular, regional Australia has many growth markets.
Last week I made this comment: “Regional Queensland has achieved something that few jurisdictions across Australia have managed: it has maintained its previous high levels of well-performing markets in defiance of Covid-19.”
I wrote that I rated the Sunshine Coast one of the strongest economic and real estate stories in the nation and that it continues to produce solid results in its property markets.
The anecdotal evidence from people at the coalface of the Sunshine Coast property industry is that sales are happening, vacancies remain low and there’s no evidence of values falling.
The latest data on prices and vacancy rates confirms that – with evidence of notable growth pockets.
Most of the postcodes across the Sunshine Coast region, including Noosa (which is a separate local government area), have vacancy rates between 1% and 2%. While some of the capital city CBDs and tourism-dominated locations like Surfers Paradise have had big blowouts in their vacancies, the Sunshine Coast has resisted this trend.
Although tourism is an important industry to the Sunshine Coast, its economy is insulated by the ongoing massive spend on infrastructure, including the evolving medical precinct, the new CBD now under construction, the billion-dollar highway improvements, the upgrade of the local airport to international status and the subsea internet cable link to Asia – among other projects.
And this is bolstering the local property market.
The top end of the market in particular has been boosted, thanks in part of the influx of well-paid medical specialists working in the new medical precinct, based around the $2 billion university hospital.
The two most expensive suburbs in the region, Sunshine Beach and Minyama, have both experienced notable uplift in prices recently. The median house price for Sunshine Beach, just outside Noosa, has risen 16% in the latest quarter and 27% in annual terms, to reach $1.8 million. Minyama is up 7% in the most recent quarter and 23% annually – and typical houses are now above $1.1 million.
The median house price for Noosa Heads has risen 8% in the past year, including 1.4% in the most recent quarter.
Other locations throughout the Sunshine Coast region, including Mooloolaba, Maroochydore, Coolum and Pelican Waters, have recorded more moderate growth, but nevertheless have achieved price uplift in both the past 12 months and the most recent quarter – and a time when the big cities are feeling the negative impacts of Covid-19.
Keep that in mind the next time you hear one of our chattering economists telling us that “Australian property prices” are falling.
The Sunshine Coast is a standout example among many thriving regional markets.
This article is republished from www.propertyobserver.com.au under a Creative Commons license. Read the original article.
‘Broken’ housing system pushes gentrification from city to suburbs
Gentrification has moved from the CBD to the suburbs of Australia’s three largest cities, in a trend researchers say shows the country’s housing system is “broken”.
A University of Queensland team mapped urban renewal and population demographics from 2006 to 2016 to see how the process had spread through Brisbane, Sydney and Melbourne.
Broadly, gentrification is the process of wealthier people moving into previously poorer areas, pushing out people who already live there as the price of rent, housing and other cost-of-living measures rises.
UQ urban planning expert Dr Dorina Pojani, one of the authors of the research, said the data showed gentrification stabilised in the CBDs some years ago, with suburbs as far as 15 kilometres from the city centre now going through the process.
“This was quite surprising to us, because the conventional wisdom is that you get high levels of gentrification in the centre of cities and less the further out you go,” Dr Pojani said.
“Instead we found the inner cities are actually pretty stable. They’ve seen a little bit of change but not nearly enough to call it gentrification.”
In particular a ring of suburbs from about five kilometres to 15 kilometres outside the CBD seemed to be either fully gentrified or rapidly gentrifying.
Dr Pojani said the phenomenon was relatively uniform across all three cities and showed what she believed to be the result of Australia’s focus on housing as investment and not necessity.
“The fact that there is any gentrification is an indication of a broken housing system,” she said.
“We need to fix the housing system so this phenomenon is removed from geography and urban planning.
“We need to instil in our policy makers the concept that a house is a place for living. It’s not a place to store or showcase wealth.”
She said viewed through that lens, resistance to gentrification in the inner ring of the three major capitals suggested more of a drive to preserve the “character” of suburbs for wealthier residents, rather than a concern for poorer residents.
“Some of it is pure NIMBYism, people who don’t want new development no matter what, they want to keep their property prices high and one of the ways to do that is keep supply low,” Dr Pojani said.
“Gentrification has moved out from the CBDs steadily, so there might be people who want to live closer in but they just can’t afford it.”
She and the other researchers suggested stronger planning approvals across the country, rather than trying to “patch” gentrifying pockets on an ad hoc basis.
In Brisbane, suburbs such as Fairfield, Moorooka, and Sunnybank, which have had historically high immigrant populations, are now seeing more affluent groups move in, while Wooloongabba is seeing rapid change due to its proximity to the CBD.
While Brisbane has an almost perfect ring of suburbs rapidly gentrifying, Sydney’s gentrifying suburbs are mostly in a large southern strip, the research found, while the northern suburb of Ryde had been the target of infill development policies.
Melbourne has two main gentrification clusters located five-to-15 kilometres to the north and west of the CBD, typified by suburbs such as Footscray and Sunshine. Much like in Brisbane, the historically migrant populations of those areas are being replaced by more affluent residents.
The researchers used common metrics for measuring gentrification, including increasing household incomes, educational attainment, home ownership and white collar occupations as well as decreasing age and growing population density.
This data was sourced from the Australian Census as well as local council data and Google Maps.
The research has been published in the journal Australian Planner.
This article is republished from www.brisbanetimes.com.au under a Creative Commons license. Read the original article.
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