Property values are set to rise in cities across the nation, according to a survey of analysts by comparison website Finder.
In the latest Finder survey, experts gave their forecasts on 12-month change of property prices in Australia’s capital cities. With property prices having shown rises in Sydney and Melbourne in both June and July, analysts on average now expect property markets generally will rise over the next year.
Graham Cooke, insights manager at Finder, says: “Most economists surveyed foresee small levels of growth across the board, but a few tipped prices to fall, especially in Sydney and Melbourne.
Of all the capital cities, Canberra came out on top with the highest predicted growth on average, followed by Hobart and Brisbane.
A senior economist at the Commonwealth Bank says the property market is undoubtedly improving. CBA senior economist Gareth Aird says his analysis of the latest price data is positive.
“I think the latest numbers are actually going to be the start of a trend,” he says. “We are seeing some modest rises across Australia’s biggest capital cities.”
According to BIS Oxford Economics’ Building in Australia 2019-2034 report, house prices and rents are expected to bounce back up in 2020 following almost two years of declines in the biggest cities.
Managing director at BIS Oxford Economics, Robert Mellor, says the 2019-20 financial year “should represent the trough for total building” and anticipates a “strong rebound” for the property market and new construction in 2020.
The new report highlights the various factors that are expected to encourage growth in the residential market, such as the recent interest rate cuts announced by lenders after the RBA dropped the official cash rate twice in a row, with a further cut expected in the final quarter of 2019.
Other factors that are expected to stimulate growth include the banks’ cuts to mortgage serviceability assessments, as well as the Federal Government’s First Home Buyer Deposit Scheme, both of which are aimed at reducing barriers to entry into the property market and boost buyer confidence.
Leading mortgage insurer Genworth says lower interest rates coupled with other economic stimuli are halting the decline in housing prices experienced earlier in the year some markets, particularly in Sydney and Melbourne.
Genworth chief executive Georgette Nicholas points to the drop in the official interest rate to 1%, government tax cuts, APRA changes to serviceability rules and state and federal infrastructure investment as contributors to a promising economy underlying real estate demand.
“The rate of price decline has really slowed over the last three months and we have got to a point of stabilisation where buyers are starting to come back into the market,” she says. “People who may have been sitting on the sidelines are able to get in because of the previous home price depreciation.”