Like all Australians, I was saddened to see the bushfire devastation over the Christmas/New Year break.
More than 2,000 Australians have lost their homes and this sits particularly heavily with those of us in property, as we know the value of a home extends far beyond the material.
Losing your home in a bushfire has got to be one of the most traumatic experiences any Australian can face. I’d like to extend my personal condolences and best wishes for the re-building process to those families affected by these fires.
As we begin a new decade, we are entering a new moderate growth cycle in Australian property, led by Sydney, which is the strongest I have seen it in 30 years.
Brand new listings are appearing on agency websites all over the country this week, as the Summer/Autumn selling season gets underway.
Final figures for 2019 from CoreLogic show a national growth rate of 4% in the final quarter, which is the highest three-monthly growth rate since 2009.
I think this momentum will continue across most metro and regional markets given incredibly low interest rates, better access to finance and stable employment. These are the three big macro issues that should support the national market this year.
Sydney and Melbourne are likely to lead this growth given they are well into recovery now.
I expect about 5-10%, which is a bit less than other predictions. The hope is we’ll see a return to normal levels of stock for sale this year, which should take a bit of the heat out.
Here are the 8 key things to know about the market in 2020
1. Low interest rates will propel the Australian market this year. As CoreLogic Research Head, Tim Lawless points out, it’s pretty extraordinary to see the three year fixed rate lower than rental yields and rates might go even lower still!
2. Low interest rates create a big disincentive to leave cash in the bank. I think more downsizers, retirees and investors will look to property for capital preservation, reliable growth and better returns than a term deposit over the next few years.
3. Better access to finance will also spur on activity. We’re hearing stories of buyers who couldn’t get enough finance in 2017/18 now being offered sizeable loans to fund their property purchases since the banks loosened the rules.
4. There’s $2.9 trillion sitting in super and SMSFs are continuing to find their way into property. It’s a safe and reliable option for preserving capital and achieving reliable returns from long term growth and decent ongoing yields.
5. Starting this month, the First Home Loan Deposit Scheme will boost the lower end and give first home buyers another leg-up. The scheme allows young people on modest incomes to buy with a 5% deposit and a government guarantee on the rest.
6. The weaker Australian dollar will bring offshore buyers and expats back to Australia this year, especially Sydney. We offer a significant discount compared to other stronger currencies and ongoing issues in Hong Kong are prompting Aussies to come home.
7. The world took notice of Australia’s luxury market last year, particularly Sydney. First, we saw the Opera Residences sale at $27 million or $96,000 per sqm. Then we had the Barangaroo penthouses sale at $140 million or $100,000 per sqm. People who want a business base in Asia consider Australia very attractive. Big sales like these give others confidence to invest major capital into our property market.
8. Barring an extraordinary economic event, I think the Australian economy is in good health. Employment is the greatest factor in market stability and right now, unemployment remains low and jobs growth is solid. Whatever your plans for 2020, I wish you the best of luck in the property market this year.