An Optimistic Outlook For The Property Market In 2020!By Lisa Fletcher | 03-12-19
Since May, we have seen two crucial developments for the property market which appear to have consumers looking a little more optimistic about the future: an interest rate cut from the Reserve Bank and the change of Coalition following the federal election.
Although national house prices were still trending lower across most states in 2019, the downturn appears to be easing, with the rate of decline slowing.
Corelogic data reports show that the Melbourne property market has recently grown by 0.2% since June. This is big news as it has not experienced positive growth since the peak in 2017. Melbourne has also recorded a preliminary clearance rate of 70% for July - contrast this with a clearance rate of 59.9% last year.
The housing downturn is easing and there are further factors behind this, which give us a reason to be optimistic about Melbourne's property market in 2020.
Looser credit lending restrictions, set by the Australian Prudential Regulation Authority, mean banks can now set their own serviceability criteria, with borrowers only needing to be able to service loans if interest rates are raised 2.5 percentage points higher.
We have seen the lowest mortgage rates since the 1950s! With the RBA cutting interest rates to a historic low of 1 per cent, June and July saw the first back-to-back rate cut since 2012, which means borrowing is cheaper.
With the Coalitions promises of tax cuts and a return to budget surplus, along with funding for several job creation initiatives and infrastructure projects, there certainty for consumers, investors and markets.
The First Home Deposit Scheme could also boost the market when it kicks off on 1st January 2020. FHOB who are eligible and have saved an initial 5 per cent deposit, will be able to lend up to 15 percent of the purchase price of a property driving demand for homes under specific price points.
Corelogic has reported a clear upwards trend in buyer activity since June, although the annual number of settled sales remain around 17 per cent below the decade average.
With strong population growth rates, easier access to housing credit and a continuing stability from local economies, this should provide fuel for this upturn. The price rises could be even stronger if the Reserve Bank does cut interest rates again, as is currently forecast by most economists and priced in by financial markets.
If you are interested to learn more about the current market or are considering selling, you can contact your local area specialist at Peake Real Estate on 9707 5300 today.
Key source: corelogic.com.au