Will Melbourne and Sydney property prices really have double digit growth next year?

ANZ bank has forecast that the Sydney and Melbourne house prices will be growing at more than 12 per cent per annum by the middle of next year.

ANZ Economists believe that house prices in aggregate are now picking up solidly.

The say that interest rate cuts, easing of finance regulations and taxation certainty have combined to create an ideal environment for a solid rebound and will super-charge the Sydney and Melbourne property markets to a point they will effectively wipe out the price falls recorded between 2017 and early this year.

ANZ believes that by the end of this year, Sydney and Melbourne prices will be up by a further 3 per cent.

By the middle of next year, these markets could be growing at an annual rate of 12 per cent and 13 per cent respectively.

property forecasts

ANZ senior economist Felicity Emmett said the property markets of the two cities were re-bounding much quicker than expected.

“Auction clearance rates bottomed out in December and have been rising since. But the improvement became much more marked from May onwards,” she said.

“The change in sentiment was driven by the combination of lower rates, easier access to credit, and increased certainty around housing taxation. Together, these factors have helped to shift sentiment from one of pervasive negativity to broad optimism.”

Strong auction clearance rates

With auction clearance rates remaining high, increased prices are likely to follow as has happened in the past…

house prices auction resultsLower interest rates are fuelling our markets

The Reserve Bank has cut interest rates 3 times now and since then, dwelling values as measured by CoreLogic have increased strongly in Sydney and Melbourne.

house prices

The following chart from ANZ shows how interest rate cuts (the little red squares) historically lead to rising property prices, and the same is happening this time around.

rate cuts drive our markets

The lift in prices, however, will come at a longer term cost with household debt levels likely to increase while affordability will fall.

“As prices recover, we expect affordability, particularly in Sydney and Melbourne, to decline,” Ms Emmett said.

The recovery in house prices has been particularly marked in Sydney and Melbourne, where the property slump was felt the most.

And, as always, the markets are fragmented across different price brackets

Sydney House prices

 

Melbourne House prices

Brisbane House prices

Perth House prices

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NOW READ: Latest property price forecasts revealed. What’s ahead in the next year or two?

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'Will Melbourne and Sydney property prices really have double digit growth next year?' have 2 comments

    Avatar

    October 21, 2019 Craig

    This is going to further make it difficult to enter the property market. The cost of living in Australia has grown exponentially, how will new home buyers enter the market? We have been living and working oseas for several years, and every time we want to come home – house prices blow us out of the water as we are new home buyers for Melbourne, now at 50. Ok we have a substantial cash depositi, but from all accounts who is going to lend us the balance as house prices continue to increase – meaning we need to borrow more. Thats why each time we’ve turned around ane re-signed oseas contracts, cant afford to live at home any more?

    Reply

      Michael Yardney

      October 21, 2019 Michael Yardney

      Yes – it will make it more difficult for first home buyers Craig – esp if you hope to live in Melbourne or Sydney

      Reply


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