What’s in Store for the Australian Property Market in 2020?
2019 was a tale of two markets. Leading up to the federal election, in May 2019, confidence in the housing market had been dented by the banking royal commission and debate about proposed changes to negative gearing and capital gains tax concessions. These two factors, combined with tighter bank lending practices, saw buyers pull back from the housing market and property values decline.
Confidence and market activity then turned a corner, once it was clear there was going to be no changes to property tax policy with the re-election of the coalition government. Activity was then further boosted by the Australian Prudential Regulation Authority (APRA) relaxing mortgage serviceability requirements and cuts in the official cash rate by the Reserve Bank of Australia (RBA).
Looking ahead, the Australian property market in 2020 will be driven by two main factors, interest rates and low levels of properties on the market for sale. Cheap mortgages and looser serviceability requirements will see first home buyers, downsizers and upgraders all reassess their budgets and look to get into the market or move.
In terms of the local property market, stock levels have maintained a consistent level over the past couple of years, with more homes changing hands in Pakenham (924) than in any other Australian postcode in 2019 according to realestate.com.au data.
This should give those looking to sell in the next 12 months good confidence in continued demand for properties in this area, and likewise give buyers plenty of choice in the marketplace.
2020 should see a power shift from banks to borrowers with the Comprehensive Credit Reporting (CCR), with borrowers being assessed on their full financial history including income, expenses, defaults and the person’s reliability to pay a bill on time. Responsible consumers should see their credit scores get even better, giving them more leverage to negotiate better rates, borrow more, and potentially secure their dream house.
Prior to June 2019, borrowers were assessed on their capacity to service a mortgage with an interest rate of 7.25 per cent. This has since changed to a rate of 2.5 points above the quoted interest rate (eg 6.5 per cent if the interest rate is 4%), making borrowing accessible to more people, but also allowing applicants to borrow more.
This should see more first home buyers entering the property market and an increase in tenants becoming home owners. In some cases paying a mortgage has become comparable to the cost of renting a property.
If you are thinking of buying or selling in 2020 contact Sam Paynter 0439 429 110 of LJ Hooker Pakenham for personalised information and advice for your real estate needs.
https://sampaynter.ljhooker.com.au/
Thinking of building your own home? Read our article below about why you will need a licensed land surveyor.
https://nobelius.com.au/news/3-reasons-to-always-use-a-licensed-surveyor-in-victoria/