Window of opportunity closing for bargain hunters: home prices poised to grow again
Home seekers keen to land property on the cheap have been warned to take swift action in the face of growing industry change or risk losing the chance to get a lower price.
Sydney’s switch to a buyer’s market could be shorter lived than many home seekers anticipate, leaving them with less time to score a potential bargain.
New projections have revealed property prices will keep falling until the third quarter of this year before bottoming out.
Prices would then begin rising again in 2020, albeit at a much slower pace than during recent years when some city regions recorded double digit price growth.
Detached house values were forecast to increase an average 3.1 per cent next year, while unit prices would grow 4 per cent, according to the research by Moody’s Analytics.
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“The correction in Sydney is forecast to have largely passed by 2020, but home value growth will be far from the lofty gains of recent years,” Moody’s noted.
The market recovery would come off the back of the Reserve Bank’s decision to cut the cash rate to the lowest level since the 1960s, according to the financial group.
There would also be a boost from Australia’s financial regulator easing serviceability requirements on the issue of new loans, which would make it easier for buyers to get mortgages from banks.
Difficulties getting credit have been one of the drivers of the current downturn, where a depleted base of buyers helped push housing values down nearly 15 per cent since their peak in July 2017.
Recovery would be modest due to a weaker economy, Moody’s said. “A gradual improvement will be the path going forward, with softer macroeconomic conditions at home, including expectations of wage growth remaining subdued working to dampen a stronger recovery.”
Moody’s also predicted a national recovery in housing prices. National housing values would decline a total 7.8 per cent in 2019 and rise by 2.2 per cent next year. A 4.7 per cent lift in values would follow in 2021.
Real Estate Institute of NSW chief executive Tim McKibbin said home seekers should capitalise on improved buying conditions while they still could.
Analysis from the peak industry body revealed current conditions for buyers were the best in years, but may not last.
“The decline in property prices we have seen over the past year is likely plateauing,” Mr McKibbin said, adding that strengthening auction clearance rates were pointing to a coming recovery in values.
“For purchasers who have been waiting for the market to bottom, now is a good time to be looking closely at where the market is headed over the coming months,” he said.
“With the election and Banking Royal Commission behind us, the recent RBA interest rate cut — and more cuts predicted — the fundamentals are in place for growth in property prices.”
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REINSW’s analysis of CoreLogic median sales prices over the three months to April found that the market has been extremely favourable for buyers, with 81 per cent of Sydney house and unit markets recording a drop in median prices.
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Across NSW as a whole, 68 per cent of house and unit markets showed a fall in median sales prices.
Mr McKibbin said these conditions would be temporary because the full effect of the RBA interest rate cut was yet to fully kick in. “If you’ve got your finance organised, now is the time to start looking in earnest.”
Originally published as Window of opportunity closing for bargain hunters: home prices poised to grow again