Real estate will continue to bolster over the next five years as one group predicts growth in median prices.
As 2019 saw the housing market return from its lows, Propertyology expects growth will continue over the next five years.
Although a lot of the growth last year was centred in Sydney and Melbourne, Propertyology head of research Simon Pressley expects the growth will be more widespread.
The firm suggests that in 2020, property buyers should make decisions based on what the medium-term fundamentals say, instead of focusing on today’s market results.
“The 2019 mid-year momentum change in Australian property markets was triggered by the stimulus of three interest rate cuts. It’s a sugar fix of sorts. But it doesn’t change underlying fundamentals,” Mr Pressley said.
“While a quick burst of sugar on occasions doesn’t hurt anyone, we all know that sugar is not a sustainable energy source.
“Those contemplating participating in 2020 property markets would be wise to focus on the fundamentals of a balanced diet.
“Within a year or so, these current stimulatory policies will be gone, and Australia’s best-performed property markets will be the ones that always had the strongest fundamentals.”
While the current stimulus measures were in response to softer national economic data, when it is compared to the post-global financial crisis stimulus, it was valid, Mr Pressley said.
“The strong, and largely across-the-board, rebound in Australian real estate prices from the 2009–10 stimulus is likely to be repeated in 2020,” he said.
“However, the smart decision-makers of today will be looking beyond 2020 and trying to figure out which Australian property markets have the best potential post-stimulus.”
When the global financial crisis sugar wore off, all capital city property markets declined in 2011, and five of them also declined in 2012, he said.
“The markets which subsequently went on to become the best performers were ones which hadn’t seen much price growth during the pre-GFC years, their housing supply had been tightening throughout all of those lean years, and price growth then occurred through improved local economic conditions,” Mr Pressley said.
“Back then, the markets which had those key fundamentals included the likes of Sydney, Melbourne, Hobart, Orange, Byron, Geelong and Newcastle. This time around, it will be completely different property markets.”
There was nothing orderly about the current property markets, Mr Pressley said.
“Given the significant policy disruptions, I consider it to be a completely futile exercise to attempt to forecast actual rates of property price growth for 2020, and anyone who buys property based on the potential of a one-year result is in the wrong game anyway.”
The outlook for Australian real estate is as good as it has been for many years, he said.
Hot tips for buyers and sellers of Gold Coast in 2020
If you’re targeting new property for next year, it may be time to think about 2019 and how much the market has changed.
A nationwide downturn and low interest rates were the two big reasons why agents say buyers can get the most out of the conditions but need to act quickly.
John Newlands, director of the Real Estate Institute in Queensland on the Gold Coast, said buyers had regained their confidence after a shaky start to the year.
Mr Newlands said that since the election and the Royal Banking Commission, buyers have returned and realistic sellers can benefit from their willingness to buy.
“Lenders have settled in and there are very low interest rates for buyers,” he said.
“The infrastructure on the Gold Coast gives us more depth than in the past.
“Sellers need to be realistic and don’t think prices will go up.
“It’s a healthy market (on the way to 2020), you don’t have to be above the market, you have to be in tune with it.”
Mr. Newlands said good marketing and presentation are key for providers.
Michael Kollosche, director of the self-titled agency, said there will be limited stocks in the Gold Coast market by 2020, which means that both buyers and sellers should change their approach.
“Buyers who want to buy property have to be a little more aggressive,” he said.
“It is definitely the impression that the market is moving upwards. If you are not in a hurry, you will probably regret it as you see property prices go up and pay more for inferior properties.”
According to Kollosche, low interest rates have been a catalyst for sellers to keep their properties, resulting in a lack of supply and slowly rising prices.
“We find that most sellers see increased interest in the first three to four weeks (after the listing),” he said. “Premium buyers usually appear at the start of the campaign.
“It is important that you carefully consider the price and sales method when you first come to the market. “
Australian economy, housing market and recession forecast for 2020
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.
State by state: A December update on Australia’s property markets
Australia’s housing-market rebound continued over the last month, led by strong price growth in our two big capital cities, Melbourne and Sydney.
It’s really been a year of two halves.
The year started with significant negative sentiment, including fears about the results of the Hayne royal commission into banking and an upcoming federal election, as well as fears about overseas economic problems including the USA China trade war and Brexit.
In the first half of the year, the Sydney and Melbourne property markets continued their slump, but since bottoming out in June earlier, the house prices have recovered strongly, buoyed by three interest-rate drops some tax cuts and the banks loosening their lending criteria.
However, our markets are fragmented. While the Sydney and Melbourne property markets are showing a clear turnaround, the other states are still lagging.
National dwelling values marked their fifth consecutive month of growth in November, taking dwelling values 3.8% higher over the quarter.
Combined capital city dwelling values were 4.6% higher over the November quarter while combined regional market values only rose by 1.1%.
Brisbane’s property downturn has been quite shallow compared to the big two capital cities, with local values only 0.8% below their peak.
But this followed a relatively mild growth cycle where growth in housing values in Brisbane was only 7.5% over the past five years.
Brisbane house prices increased by 0.9% over the last month (2% over the last quarter) while apartments in Brisbane only increased in value by 0.3% over the last month (0.9% over the last quarter.)
But now Brisbane values have posted their second consecutive month of subtle gains.
CoreLogic reports that since bottoming out in June, Brisbane’s dwelling values are up 2.2% with little difference separating houses and units where the recovery is recorded at 2.2% and 2.1% respectively since June.
The recovery trend has been slightly stronger across Brisbane’s premium market, with the top quartile recording a rise of 2.4% compared with a 1.5% lift across the
The following metrics show how sluggishly the Brisbane housing market is performing:
- The average selling time of a home is 52 days (37 days a year ago);
- Vendors are discounting their properties an average of 4.3% to affect a sale (4.5% a year ago); and
- 13.3% fewer properties sold in the last 12 months compared to the previous year.
With migration rates lifting, supply under control and generally healthy levels of housing affordability, the Brisbane housing market fundamentals are looking healthier compared to most other capital cities.
At the same time the underlying strong demand from home buyers and investors from the southern states at a time when yields are attractive and housing affordability is relatively healthy and putting a floor under property prices.
Brisbane’s economy is being underpinned by major projects like Queen’s Wharf, HS Wharf, TradeCoast, Cross River Rail, the second airport runway and the Adani Coal Mine, but jobs growth from these won’t really kick-off for a few more years.
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