House prices across Australia to stabilise by the end of 2019

Australian capital cities are expected to see property prices stabilise by the end of the year, with modest price growth predicted in 2020, new analysis shows.

Following a sluggish start to 2019 – with the financial services royal commission, a slowing economy, investor caution and election uncertainty subduing price growth – recent events are pointing to a change of mood in the latter half of this year, according to the Domain Property Price Forecasts.

Economist Trent Wiltshire says three key factors point to a turnaround:

  1. The Reserve Bank’s recent interest rate cut and likely further reductions;
  2. Banking regulator the Australian Prudential Regulation Authority loosening constraints on mortgage credit;
  3. Re-elected Coalition government with no changes to Labor’s proposed negative gearing;

The report found capital city property price falls would likely ease, with prices bottoming out in spring this year, due to high clearance rates and growing buyer interest.

Domain predicts the six months to December 2019 will see house and unit prices grow by one per cent nationally, with 2020 bringing growth of 2 to 4 per cent in house prices and roughly one to 3 per cent for units.

Contributing factors to growth:

  • Cuts to the cash rate in July and November 2019;
  • Government predictions of 1.75 per cent annual national population growth;
  • A steady unemployment rate;
  • An increase to home lending at the end of the year 2019;
  • 20% less new housing construction;

Sydney house prices are forecast to increase between 3 and 5 per cent next year, according to Domain economist Trent Wiltshire;

“We’re predicting only moderate property price growth over the next 18 months,” Mr Wiltshire cautions. “Prices should bottom out soon, but the impact of lower interest rates is likely to be smaller than in the past; households are cautious about taking on more debt, affordability remains a problem in most cities, and wages growth is likely to remain weak.”

 

*source Domain

Posted in Latest news, News on 2nd July, 2019