Tag: australian property market

The Australian economy is experiencing some lows but one sector is thriving: the housing market. The first month of the year has proved strong for investors as banks report survey of home-buying intention at a consistent rise. The property market in Australia is looking well and good at the start of 2020, but will it remain the same for the succeeding months?

2019 has been a year of soaring prices and 2020 is expected to follow this path for the first six months. This is largely due to low-interest rates and improved lending conditions, however, the state of the national economy could affect and slow down the pace of gains. Here are some of the expectations we’ll see this year

The Rise of First-Home Buyers

There will be an increase in the number of first home buyers thanks to Australia’s state and territory incentives like the First Home Loan Deposit Scheme. For as little as 5% deposit, individuals can now purchase their first home. This is for home buyers that earn less than $125,000 a year and $200,000 for couples. Incentives like this along with housing affordability, low mortgage rates, and improved home loan servicing rules have provided first-time buyers more opportunity to own a house.

Last year alone the total number of first time home buyers reached 110,000. Despite a difficult year with disasters leading to big economic changes, many first-home buyers still achieved their house goals. These first home buyers who take up almost 20% of the mortgage lending population are leading the market in buying residential properties as more risky financial market conditions are forcing many potential investors out.

Melbourne May Overtake Sydney In Median House Price

Still, the top two locations for housing, Melbourne and Sydney will experience subtle changes this year. Let’s start with Melbourne. For the last 5 years, Melbourne’s population has significantly increased with consistent growth and no sign of decline. Melbourne also has yet to meet the demand for houses which results in the continued increase in rental prices and hence greater investment properties.

Expert forecasts reveal that 2020 house price for Melbourne will increase by 10.2% and may even overtake Sydney. Sydney which is currently at a growing house price pace of 10.4% will fall by 4 per cent by 2020. This is due to the rise of people living in high-density apartment and units which results in a general decrease in price.

With the recent disasters of the virus and bush fires, interest rates will also start to get lower. With this, house prices in numerous capital cities are expected to remain in price this 2020, however, population growth and new houses will affect median prices. Out of all the cities, the best forecast is for Brisbane where housing has remained affordable. Overall, the future is hopeful for Australia’s capital cities and the worst is over for Sydney and Melbourne.

Regional Markets Strongest Locations: Tasmania, Western Australia, Victoria, and Queensland

Australia has had a tumultuous year and its cities have endured difficult times. But things are starting to get better as prices begin to turn up in the first few weeks of 2020. In fact, by the end of the month, we have seen home prices up to almost 1%.  After the US/China trade deal announced the good news of bringing the export level to China back again, a boost to the housing market is already on its way. This is also strengthened by economist predictions which state the housing market will have a significant 2.75 increase in 2020 and another increase of 3.50% by 2021.

In the regional markets, we’ll see the strongest housing conditions in Tasmania where prices soared to 1.3$ over the month. Following close is regional Western Australia with 0.9, and both Victoria and Queensland which is up by 0.8%. In Western Australia, there’s a possibility of decline due to the iron ore supply problem. Tasmania will gain a significant rise in prices and Victoria will have a much higher price increase in 2019.

Houses Will Get Smaller and More Customized

There was once a time when Australians are known to have the biggest houses in the world, but today as data shows, they’re learning to appreciate the beauty of small yet unique dwellings. On average houses in Australia are now at 228 square meters, this is lower than the previous years and the lowest since 2001.

Many reasons are being considered such as affordability issues, geographical limitations and the downsizing of kitchens as less and less Australians cook at home.  Another trend that’s been positive for the past few years is the surge of unique housing in Australia. Homes are built to better suit their owners, home builders are taking into account the modern low-maintenance lifestyle of citizens.

Risk Of Recession

The Australian property market has endured a lot of falls in the past years. Things started to turn up in late 2019 when analysts predicted an increase until 2020 came and brought another bad news. The short housing price surge was called “mini-boom” but will most likely not be repeated. Australia had the largest household debt in the world and the lowest saving rates for a decade. Today, forecasts are split with some believing housing prices will rise due to low mortgage rates and others believing we are on the brink of a recession. Unless the downtrend continues to a global scale, the Australian property market will most likely have a moderate increase this 2020.

References:

https://www.canstar.com.au/home-loans/property-market-outlook-2020/

https://www.theguardian.com/australia-news/2019/nov/16/from-freefall-to-boom-what-the-hell-is-happening-to-australias-housing-market