Property market will continue to strengthen in 2020: NAB

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on October 24, 2019
Property market will continue to strengthen in 2020: NAB

Namibia. Photo by Vicky Sim on Unsplash

The Australian housing market will continue to gain momentum in 2020, according to the latest research from NAB.

The big four bank believes prices have already bottomed and will continue to rise over the remainder of 2019 and into 2020, mainly driven by price increases in Sydney and Melbourne.

NAB’s survey of over 300 property professionals for its residential property index revealed housing market sentiment among these property experts has improved.

Market sentiment improved in all states except WA which was the only state to report a negative index reading.

Sentiment lifted sharply in Victoria and was the highest in the country by some margin.

Property professionals in all states except WA expect to see positive gains in the next year, with Victoria and NSW leading the way.

property index

Source: NAB

NAB Chief Economist Alan Oster believes the results suggest Australia’s housing market is on the way to recovery.

“This marks a sharp reversal from the previous survey where Victoria and NSW were expected to be the weakest states for price growth and the only states where prices were tipped to fall,” Mr Oster said.

The survey also pointed towards an increasing (although still below average) number of investors in both the new and established housing markets.

“That said, tight credit was again called out as the single biggest constraint on new housing development, and access to credit the biggest impediment for buyers of existing property across the country,” Mr Oster said.

Overall, NAB predicts “moderate” average growth of 4.5% across all capital cities in 2020.

Units, meanwhile, are expected to grow in price by 3.9%.

“Despite the stabilisation in prices, we expect the activity side of the market to remain weak. Dwelling investment is expected to decline relatively sharply over the next few quarters – though from a high base,” NAB’s report said.

“While the pipeline of work to be done remains high, it is likely this will be quickly eroded with high rates of work done.

“Building approvals have continued to trend down, suggesting little replenishment to the flow of new work.”

NAB Hedonic House Price Forecasts (%)*

2017201820192020
Sydney 3.4 -10 1.8 7.4
Melbourne 11.3 -9.1 0.7 7.4
Brisbane 2.5 0.4 -1.8 0.2
Adelaide 3.2 1.3 -2.2 -0.8
Perth -1.2 -4.3 -7.2 -2.0
Hobart 11.4 8.3 1.5 1.8
Capital city average 4.8 -6.7 -0.6 4.5

Source: CoreLogic, NAB Economics. *percentage changes represent through the year growth to Q4.

National house prices up 2.7% over the past three months

While the NAB index is referring mainly to future property prices, the latest House Price Report from Domain shows the median Australian house price has risen by 2.7% over the September 2019 quarter.

From their peaks to their lowest point, the national median house and median unit prices have lost almost $65,000 and $43,000 respectively in recent years, but the data supports NAB’s view of a continued upswing.

The median property price has risen to more than $770,000, while the median unit price increased by 1.8% to just under $540,000.

According to Domain’s data, this is the first national quarterly growth seen since December 2017, and like NAB says, it’s been mostly driven by buoyant Sydney and Melbourne property markets.

Median house prices

Capital citySep-19QoQYoY
Sydney $1,079,491 4.80% -1.60%
Melbourne $855,428 4.10% 0.00%
Brisbane $562,847 -1.00% -1.80%
Adelaide $538,550 -0.60% 0.70%
Canberra $738,864 -0.70% 0.60%
Perth $527,107 -1.00% -2.40%
Hobart $482,960 1.30% 2.60%
Darwin $521,651 1.00% -4.40%
National (excludes Darwin) $773,635 2.70% -1.00%
Source: Domain House Price Report

Experts have attributed these surges to:

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    William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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