BIS Oxford Economics and QBE Insurance have been in a partnership for 16 years and have released a housing outlook of what will occur in the property market over the next three years. The property outlook has a strong positive outlook, regardless of Australia’s slow going economy.
The cities that are expected to experience a decrease in the median house price are Sydney (0.2 %) and Darwin (0.9%). Cities like Hobart and Canberra are forecasted to dominate in Australia, in terms of growth, with Canberra predicted to grow at 16.3%, while Hobart comes in at second at 10.8%. Meanwhile, cities like Melbourne (10.2%), Perth (2.8%), Brisbane (7.1%) and Adelaide (6.9%) are expected to have continuous growth.
The 2020 property market report has shown that the focus is on the effect of units on nationwide growth rates, which has predicted that generation Y will most likely stay longer in rental accommodation. In the ten years to 2012, the introduction of units was at 52,600 per annum, however in the five years to 2017, it has increased rapidly to 94,000 per annum. Experts have said that an increase in supply, will most likely result in the market of capital city units, to fall. Currently, Brisbane is at the highest at 7.2%, with Melbourne coming in at second at 4.8%. Other capital cities continue to grow steadily with Sydney at 3.8%, Perth at 0.6%, and Darwin at 3.2%. However, it is expected unit prices in Hobart will rise by 8.6%.
According to the Reserve Bank of Australia (RBA), the reported cash rate (interest rate) in 2020 will be at 1.75 per cent, an increase of only 0.25 per cent above the current rate (1.50%). The report suggests that an increase is only expected in 2019 and 2020, when the economy is expected to take off. The RBA’s long-term strategy of maintaining interest rates low, has not yet achieved the desired effect of increase wage growth, housing affordability, and easing household stress. However, the RBA can only influence the previous factors to a certain extent, as there are other forces and factors that is effecting financial stress in households like high energy prices and general trend towards low wage growth.
Over the past 5 years, population growth in Melbourne has sky rocketed, and it is expected that it will continue to grow rapidly. With a huge increase in supply for properties, especially in the western suburbs, developers have not been able to meet the massive increase in demand, which has resulted in an increase in rental prices. Reports have forecasted that by 2020 prices would have increase by 10.2 %, and may overtake Sydney in terms of median house prices.
Over the past 6 years in Sydney, the median house price has been rapidly growing at an average of 10.4 per cent. However, reports have shown that it is predicted to fall by 4 per cent by 2020. The report has also shown that there is a general pattern of people leaving Sydney, for more affordable properties. Lastly it is predicted that people will be living in high density apartments and units, which could result in a general decrease in prices.
With many people forgetting about investing in Hobart, it has come to the attention to many investors as it may be a way to purchase your first property, as it currently has the lowest median house price of all capital cities. However, the median house price has rose by 10.5 per cent over the past 2 years, making it a large attraction to first home buyers and investors.
Brisbane is a city that will attract home buyers who love the warmer weather. Where it has experienced steady growth in prices at 5% per annum over the past four years, however in 2016 it has pulled back at 2 %. With economists predicting that the economy will strengthen by 2020, it may be a way to put your foot in the door into the property market by 2020.