Australia's property market prices are expected to bottom out in the coming months, followed by modest price growth forecast in 2020, according to economic modelling by Domain.
Interest rate cuts, banking regulator lending changes and no changes to negative gearing have helped boost the forecast for Australia’s property market.
While auction volumes are low, clearance rates are at their highest point in more than a year. Domain's latest property price forecast says the nation's solid population growth combined with low unemployment are expected to support property price growth.
Domain economist Trent Wiltshire says the indicators should contribute to combined capital city property price falls slowing, with prices bottoming out in spring this year.
“Over the six months to December 2019, house and unit prices are forecast to grow by one per cent,” Wiltshere said.
“In 2020, we predict house prices to grow by 2-to-4 per cent and unit prices to grow by about 1- to-3 per cent.”
ECONOMIC MODELLING AND ANALYSIS OF MARKET LEADING INDICATORS HAVE BEEN USED TO PRODUCE DOMAIN’S FORECASTS. DUE TO THE UNCERTAINTY INVOLVED IN FORECASTING, THE 2020 PRICE FORECAST IS PRESENTED AS A RANGE.
Wiltshire says there are “clear signs” Sydney’s prices are “bottoming out”.
This sentiment echoes Moody's analytics housing forecast report released this week, which expects modest rises in Sydney and Melbourne in 2020.
For the six months to December, Domain forecasts Sydney’s house price falls will end later this year anticipating house and unit prices to increase by 2 per cent across the next six months.
“In 2020, the modest turnaround will continue, with house prices expected to increase by 3-to-5 per cent over the year, and unit prices forecast to rise by 2-to-4 per cent,” Wiltshire said.
Melbourne’s market is typically six months behind Sydney, as a result Domain expects prices to fall slightly further, before bottoming out in spring 2019 and no significant rises in 2020.
Melbourne house and unit prices have recorded falls of 11 per cent and 8 per cent respectively from their peaks.
“We predict that house and unit prices will increase by one per cent between June and December 2019, ending the year at approximately $800,000 and $470,000 respectively,” Wiltshire said.
“In 2020, we forecast that house prices will grow by one to 3 per cent and unit prices by zero-to-2 per cent.”