2020 property market outlook from Hill & Viteri Property

After a sluggish first half of 2019, the Australian residential property market began rising steadily. Auction clearances and sales figures are beating records for many agents. Hill & Viteri Property discuss the property market outlook for 2020.

So how do we think 2020 will play out? Several key economic indicators inform our opinion on how the Sutherland Shire property market might perform over the coming year.

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1. Record low interest rates

While lower interest rates have given the real estate market a bit of a boost in the short term, low interest rates can have a counter effect when combined with tax cuts.

Consumers see lower interest rates and tax cuts having little effect on wages growth, which has remained weak. The result is that any surplus is used to pay down debt rather than the stimulus spending for which the actions were intended.

However, low interest rates will help first home buyers. A bump in retail sales could also help with consumer confidence levels.

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2. CEFC green home loan program

 The Commonwealth Government Clean Energy Finance Corporation (CEFC) is partnering with Bank Australia to invest up to $60 million to provide discounted home loans. Green builders and buyers must commit to construction of a home that achieves a minimum of 7 stars. This is under the Nationwide House Energy Rating Scheme (NatHERS) certification program. This allows them to receive the 0.4% discount on their home loan.

Given national and international focus on the bushfires and the call for climate change action, this program could be an important stimulus. It will give the bonus of helping Australia achieve its carbon emissions reductions targets. As this program is extended to cover existing homes, we expect to see a further boost in consumer confidence.

3. Demand will exceed supply in many markets

Residential construction levels fell sharply in Q3 of 2018. While the oversupply is being absorbed, the lack of construction activity in the capital cities will mean the demand can’t be met. This is due to lengthy approval and construction lead times.

Investors are re-entering the property market with an appetite for brand-new luxury properties. Although this group might not have a significant effect on property prices, we’re seeing some demand from expats heading back to Australia. This is because of political situations like Brexit in the UK and the protests in Hong Kong.

Sellers and buyers alike, however, remain cautious, given global unrest. Although, the recent US-China trade deal has done much to ease fears on economic performance.

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4. National economic indicators

Despite what we might like to think, it’s not all about property. A stronger economy often brings back confidence to the real estate market overall.

Australia’s liquid natural gas exports are tipped to be $49 billion in 2020. With this, a hopeful related rise in infrastructure spend. In particular, new gas fields, trains and pipelines. This infrastructure spend is expected to help employment figures and pump more money into the economy.

Deloitte analysts are predicting that mining investment will be another source of economic growth that will support business investment and construction.

The income boost that Australia has garnered from Asian tourism and property investment is likely to slow in 2020. Although the resolution of the ‘trade war’ between the US and China might increase confidence for potential visitors. This is good news for hospitality property owners and retail.

Sell now or buy now?

Low interest rates and rising home prices are good news for investors and other buyers. Industry analysts expect home prices to rise slowly but steadily over 2020 and into 2021. Sellers are coming back to the market, having held fast during the latter quarter of 2018 and until after the 2019 May Federal election.

For sellers, the situation is slightly different. Analysts are predicting home prices in the range of 5 per cent to over 7 per cent throughout the year. Predictions are based on investors and buyers taking advantage of the benefits of lower interest rate and easing of lending restrictions. However, many buyers are remaining conservative when it comes to risk.

Stay current with the latest property news

If you are a home seller or buyer and want to stay on top of the Sutherland Shire real estate market ensure you use experienced agent to help guide you through the process. Stay in touch with Hill & Viteri Property. We keep our fingers on the pulse of the Sutherland Shire housing market and are always happy to provide you with the help and support you need.

If you would like one of the Hill & Viteri Property team to demonstrate this to you give us a call on 9545 2220 or click here to book an appointment. If there is a team member you are looking for click here to meet the team.