What does 2020 have in store for the property market: Expert predictions
2020 is set to be a positive year for the Australian property market, which will be a relief to home-owners and investors alike after a tough 2019. With the uncertainty of the election behind us and last year’s three RBA rate cuts finally flowing through to the market, we can expect a spike in value for Sydney and Melbourne, while most other cities will enjoy 3-5% growth.
And this year, there are a few factors that will help first home buyers break into the market such as reduced or removed stamp duty depending on property value as well as the roll out of the first home loan deposit scheme.
Sydney - increase 12-14%
After bottoming out back in May 2019, the Sydney property market has managed to bounce back and we can expect it to register the highest rates of growth among major cities this year. In November, we saw a 2.7% jump in property prices with the high end of the market performing well in particular.
This momentum will likely continue into the new year as property listings remain low and clearance rates sit at 70%. An increase of 12-14% might seem steep, but we should remember that Sydney experienced a drop of 15% over the last few years, so there is a recovery element to the sizable growth.
Melbourne - increase 10-12%
The Melbourne property market is currently enjoying a healthy balance of first home buyers and investors, and has a more accessible price tag in comparison to Sydney. While not expected to see the same levels of growth as Sydney, we can still anticipate the Melbourne property market to grow by 8%.
Adelaide - increase 3-4%
With vacancy rates currently at 0.8% in Adelaide, it’s set to become a much more attractive market for investors once capital growth slows in the second half of this year, especially since prices aren’t at the same levels as Sydney or Melbourne. While 2019 was a slow year for the wine region, things will certainly pick up in 2020.
Brisbane - increase 4-5%
If you look at property growth in Brisbane, you’ll get two very different pictures. While housing prices have risen by 0.94%, apartments have dropped by 0.31%. We can chalk this up to an oversupply of inner city apartments, which has diminished market value and bolstered vacancy rates to 2.3%. That said, we can expect to see growth of 4-5% in Brisbane overall, especially as more first home buyers and investors turn to Brisbane after feeling locked out of more expensive cities.
Darwin - decrease 6%
An oversupply of apartments has left vacancy rates sitting at 3.1%. A much needed boost in population is unexpected as the resources sector that underpins the local economy continues to struggle. Apartments have been particularly hard hit. In November alone their value slid by 7.72% while houses dropped by only 1.83%.
Canberra - increase 6-7%
Canberra has always been a solid performer thanks to strong demand for accommodation from workers in the government sector. The capital city rose by 2.9% last year, and with a median property value of $700k and a 1% vacancy rate, it remains an affordable and stable option for investors.
Hobart - increase 3-4%
While growth in the harbour city tapered off somewhat in 2019 - increasing by 4-5% compared to a whopping 12% in 2017 - slow and steady growth is still the most predictable course for the next few years.
Hobart currently boasts the lowest vacancy rates in the country at 0.5%, but rent to income ratios are currently very tight, meaning Hobart is now one of the most expensive places to rent in the country based on cost of living. For this reason, it remains doubtful that prices will rise significantly.
Perth - increase 3-4%
The Perth property market saw a dip in value of 7.6% last year, which has been tough on both home-owners and investors. On top of that, the local economy has struggled and unemployment has been unstable. That said, things are looking to pick up in the western seaboard capital as reduced vacancy rates tempt investors back into an already affordable housing market. November saw a minute increase of 0.36% and it’s predicted property value will build momentum in the new year.
Whether 2020 is the year you take your first steps up the property ladder or add another house or apartment to your portfolio, make sure you visit our home loan comparison page for an overview of the options available.