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.
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 (%)*
|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
|National (excludes Darwin)||$773,635||2.70%||-1.00%|
|Source: Domain House Price Report|
Experts have attributed these surges to:
- The 2019 election result
- Cuts to mortgage serviceability rates
- Eased lending restrictions
- Falling interest rates and the speculation of another cash rate cut in the next few months
Looking for a low variable rate home loan? The table below displays some of the lowest-rate variable home loans on the market.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) owner-occupied home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
- If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
- Pros and cons of refinancing your home loan
- What is a green personal loan and what can it be used for?
- Would credit regulation kill buy now, pay later platforms?
- Why fixed rate home loans may be dangerous
- Hydrogen cars - the new ‘green’ fuel source?