Home values in Australia’s biggest cities are on course to surge this year according to research house Corelogic, as low mortgage rates and easier lending standards unleash buyer demand.
CoreLogic sees home prices in Melbourne rising by as much as 14 per cent.
They forecast Sydney property values could increase by up to 12 per cent.
And Brisbane property values could rise 10% in 2020.
Following the largest property market decline since CoreLogic started keeping records in the early 1980s, and in which capital city dwelling values fell 10.2 per cent over 21 months, the markets have rebounded strongly in the second half of 2019, particularly in Sydney and Melbourne where the falls were the greatest.
Clearly our 2 big capital cities are playing catch up, and at this rate will reach new peaks by the middle of the year, and are then likely to continue rising but at a slower pace.
Tim Lawless, Head of Research at Corelogic, believes that in 2020, it’s unlikely we’ll see such a rapid rise in capital gains as seen throughout the second half of 2019 despite the expectation that mortgage rates will move lower over the first half of the year; several factors are likely to act as counter weights to this stimulus.
With housing values rising faster than household incomes, worsening housing affordability is likely to deliver a slowdown in activity across price sensitive segments of the market, especially in Sydney where dwelling values were already 8.2 times higher than gross annual household incomes half way through the year.
A rise in investors, attracted by prospects for capital gains and a positive spread between mortgage rates and rental yields, should help to offset a reduction in activity from more price sensitive buyers, according to Lawless.
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