The Australian economy has been going through a rough patch. Even though, the economy managed to report a trade surplus which surprised the market participants, it seems like the trouble for Australians would still not see the end of the tunnel. For September 2018, the economy recorded the trade surplus of more than $3 billion. The economy’s exports were aided by the increased prices of the commodities. In mid-2017, the economists were expecting that the house prices would move northwards in 2018. However, the recent downturn was the exact opposite of what they were expecting, and the prices would decrease further in 2019. The primary factors responsible for such significant downward momentum are the higher constraints in regard to the housing affordability, the increased guidelines for the lending purposes as well as restrictions of APRA or Australian Prudential Regulation Authority towards the new investor loans.
Recently, a survey was conducted by the major financial newspaper in which the viewpoints of five economists were recorded. According to them, national house values are expected to witness a further decline in 2019 and Sydney would be dragging the national average down. Stephen Koukoulas of Market Economics is expecting that the situation of the property market in Australia is expected to get worse. He is expecting that the prices in Sydney would be witnessing the decline in the range of 7.5%-10% in 2019. However, nationally, Stephen believes that the prices would be falling in the range of 5%- 7.5%.
In the survey, different economists are giving different viewpoints. The economists at the AMP Capital stated that a decline in the national house prices could be approximately 4% across 2019. However, this is to be concentrated in Melbourne as well as Sydney. He expects that the negative momentum in the house prices in Sydney would continue and in 2019 the fall is expected to be approximately 7%.
A key person at JP Morgan expects that the nationwide house prices are expected to experience a fall of approximately 5% in 2019. The primary factors responsible for his views are the tightening of the financial conditions as the borrowing capacity of the people in Australia have substantially reduced. Moreover, other factors responsible are the increased mortgage rates and the new stocks available in the markets.
The economist at Domain stated that the national house prices are expected to fall approximately 2% in 2019. The primary reasons for the expectations are more or less same i.e. difficult lending conditions had led to weaker housing credit growth. Owner-occupier housing credit witnessed a marginal negative momentum and, moreover, further decreases in the prices can impact the investors’ sentiments which could pull the prices down.
According to Mr. Geordan Murray, for the remaining 2018, the national house prices are expected to fall approximately 1% and then further in 2019 it could fall approximately another 1%. According to him, the regulatory interventions made by the APRA or Australian Prudential Regulation Authority had accelerated the downward momentum.
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