Thee bottom of the property market is near and property values will rise by at least 5 per cent next year, according to Macquarie Securities.
They have joined the band of analysts who predict they market will bottom before then end of the year, forecasting that property prices are likely to fall another 1 or 2 per cent in coming months, then they’ll stop falling.
Macquarie said in every Australian house price cycle since 1989, price growth followed within seven months after the monthly annualised price decline bottomed.
It says likely lower interest rates, easier lending standards and a more settled post-election environment “should see national house prices rise by at least 5 per cent by the end of 2020”.
Sydney and Melbourne property prices could once again outperform.
Movements of as much as 10 per cent in Sydney and Melbourne “wouldn’t surprise us”, said the Macquarie report.
They cite positive factors such as:
- The government’s first home buyer deposit scheme
- The relative shortage of new home listings in recent months. Sellers have kept properties off the market amid falling prices, and
- Lower borrowing rates which are likely to be the most powerful factor according to Macquarie “We assume the RBA cuts by 50 basis points in coming months and most of that is passed through to actual mortgage rates.”
- APRA wrote to lenders last month, saying that instead of the 7 per cent floor (which is 7.25 per cent in practice), they would be permitted to review and set their own minimum interest rate floor for use in assessments.
Here’s Macquarie’s forecast
The decline from the mid-2017 peak to the trough looks like being 10 per cent nationally, with Sydney’s peak to trough fall to be around 15 to 20 per cent and Melbourne’s close to 15 per cent.
If the peak-to-trough fall is 10 per cent it will be the biggest housing market fall in 40 years.
CoreLogic says there has been an improvement in the rate of decline. In April, Sydney dwelling values were down 0.7 per cent, compared with a fall of 1.8 per cent last December.
What are you going to do about this?
Now is the best time to make a counter cyclical property purchase in over a decade in the Melbourne and Sydney property markets and a great time to ride the property wave in Brisbane.
But investment success is never assured so independent professional advice and careful consideration will be as important as ever in navigating Australia’s varied market conditions.
If you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.
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