If there is one sector of the economy that has generated more discussion and heated debate than any other, it’s the property sector. Join us for a look at how Australian Property Prices may perform in 2020.
After a rollercoaster ride, green shoots are once again beginning to peek out in some capital city markets. Now, analysts and investors alike are looking to project what is in store for Australian property prices in 2020.
Australian Property Prices in 2019
Overall, the 2019 trend has been a sustained slide even if at a gentler pace than seen in 2018. Five of eight state capitals have rebounded somewhat, showing modest growth rates.
This prompted an outbreak of cautious optimism, as interest rates dropped and major lenders eased their lending restrictions slightly. Consumer sentiment measures similarly show rising national consumer sentiment after a protracted decline.
Fingers Crossed For 2020
So, what are property analysts predicting Australian Property prices in 2020 will look like and what kind of performance will Australian property deliver in the New Year? A gentle easing of bank lending practices, no changes to negative gearing and interest rate cuts by the Reserve Bank are projected to translate into a rebound by Australia’s property market.
Improving activity levels and auction clearance rates in the key Sydney and Melbourne markets, where 60 per cent of activity takes place, together with the return of monthly dwelling value growth support a sunnier the outlook for property gains. Population growth and low unemployment are also contributing to this revival.
Analysts are predicting modest overall house prices to grow by 2-to-4 per cent with unit prices growing by around 1- to-3 per cent in 2020.
Sydney’s house prices are anticipating a 2 per cent increase across the coming six months. 2020 is expected to bring increases of 3-to-5 per cent over the year accompanied by unit prices rises of 2-to-4 per cent.
Australian Property Prices 2020: Melbourne Prices
Melbourne’s market often lags six months behind Sydney. In 2019, Melbourne house prices declined by 11 per cent and with apartments dropping by around 8 per cent.
Most market observers expect house and unit prices to increase by 1 to 3 per cent with unit prices growing by zero-to-2 per cent.
As the boom in Brisbane’s apartment construction winds down, apartment supply is expected to remain flush in 2020.
With Brisbane and South-East Queensland’s housing affordability rates continuing to attract interstate migration and annual population growth expected to continue along at 1.75 per cent into 2020, a modest price turnaround in Brisbane house and unit values is expected.
In 2020 house prices are anticipated to grow by 3-to-5 per cent with units rising by between zero and 2 per cent.
Few property markets are as captive to industry conditions and economic cycles as Perth’s. While several underlying growth drivers point to a turnaround for Perth’s lagging property market, mortgage arrears continue rising. Moreover following a pronounced period of housing price declines more households are in negative equity territory.
Given the entrenched underlying weakness of Perth’s property market, modest price growth of zero-to-2 per cent for houses and units is expected in 2020.
Looking to 2020, Canberra is seen as being one of the more robustly performing markets. Solid price growth of between 4-to-6 per cent is tipped for Canberra’s housing sector.
Australian Property Prices 2020: Adelaide
After delivering modest property price rises during 2019, Adelaide is anticipated to yield one-to-3 per cent growth in property prices in 2020.
Hobart has been a smoking hot property market in 2019, enjoying average house and unit price growth of around 40 per cent in the past three years.
However, housing construction is expected to catch up with demand, placing a cap on future price increases. Analysts are forecasting house price growth of 2-to-4 per cent in 2020, with 3-to-5 per cent price growth for units.
Both the data indicators and expert commentary point to renewed optimism of a property market recovery in 2020. A range of factors including Australia’s local economic performance, wage growth, interest rates and the state of the global economy will shape the 2020 market. Time will confirm if the market is able to reverse the 2019 downward trend and return to positive territory in 2020.