AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
.jpg)
2019 was a period of turnaround for the Australian economy, especially for the property market that ended the year on a positive note against market expectations of a slowdown in residential property values.
At the start of 2019, economists were anticipating a decline in property values for about a year further. However, the country’s property market rebounded strongly, driven by gains in Sydney and Melbourne housing prices.
What does Latest Property Values Suggest?
As per the property analytics firm CoreLogic, Australia recorded its biggest monthly rise in property values since 2003 in November, with prices surging by 1.7 per cent. The increase in property prices was majorly driven by the country’s two key property markets – Sydney (2.7 per cent up) and Melbourne (2.2 per cent up).
A recent report released by the property analytics firm also showed that the country’s property prices have risen by over 4.7 per cent since June 2019, marking a longest and largest correction on record.
In addition, the residential property price indices recently released by the ABS supports the view of revival in property values in the second half of the year.
The ABS notified that the weighted average of Australia’s eight capital cities increased by 2.4 per cent in the September quarter, with increases in Sydney (3.6 per cent), Melbourne (3.6 per cent), Brisbane (0.7 per cent) and Hobart (1.3 per cent).
On the other hand, the ABS’s March 2019 quarter figures showed that weighted average of Australia’s eight capital cities fell by 3 per cent, with fall in all cities - Sydney (3.9 per cent down), Melbourne (-3.8 per cent), Brisbane (-1.5 per cent), Perth (-1.1 per cent), Canberra (-0.9 per cent), Darwin (-1.8 per cent), Adelaide (-0.2 per cent) and Hobart (-0.4 per cent).
It can be seen from the above table that though Sydney and Melbourne experienced a drastic fall in property prices in March quarter, the prices rejuvenated with a modest fall in June quarter and a significant increase in the last quarter.
Factors Driving Growth in Australian Property Market
The market experts were expecting a further decline in property prices during the course of 2019 before improving modestly in 2019. However, the property market revived early, driven by the following factors:
Ø The favorable impact of Scott Morrison’s win in the federal elections, which removed the uncertainty surrounding the Labor Party’s policies relating to capital gains discounts and negative gearing
o The Morrison government is also on track to launch First Home Loan Deposit Scheme worth $500 million on 1st January 2020, which is expected to help around 10,000 eligible first-time buyers.
Ø Three cash rate cuts in June, July and October.
o The RBA has taken the interest rate to a very low level of 0.75 per cent, after reducing it by 0.25 per cent thrice this year. The fall in interest rates drove the rise in property values, lessening mortgage rates.
Ø APRA’s move to ease lending regulations supported the rise in property values.
o In July this year, APRA announced changes to the home loan affordability tests, under which Authorised Deposit-taking Institutions (ADIs) were given the liberty to evaluate and determine their individual minimum interest rate floor.
The Australian property market has surprised many market analysts with their strength of resurrection, convincing them to expect a real estate boom in the approaching year. Experts are now anticipating an improvement of about 5 to 7 per cent in property values across all the eight capital cities over 2020. The robust forecasts are contingent on the rise in Sydney and Melbourne house prices.
Take a look at some real estate stocks that have performed significantly well in the last one year despite a slowdown in the property market, delivering considerable returns:
Disclaimer
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
