National Australian property market forecast 2020

With green shoots starting to appear in some markets, investors and analysts are starting to forecast what is in store for the Australian property market in 2020. 

Before we do that let's recap where we are and how the market has performed to date. Overall the trend in 2019 has been a continued slide, albeit at a slower rate than last year. CoreLogic data from July identified five of the eight state capitals recording a slight rise in values. This has given some cause for optimism, especially in light of the easing of lending restrictions and drop in interest rates.

Our Consumer Sentiment Report for Q2 2019 mirrors this and records rising national consumer sentiment after a year long decline. 

But what do the experts and analysts predict for 2020 and where are Australian house prices headed in the new year? Here is a summary of views from economists at leading financial institutions, including HSBC, Domain, ANZ, Moody's and Citi Research. 

HSBC

Chief Economist Paul Bloxham

HSBC's Chief Economist predicts Australian house prices to stabilise in the ensuing months and believes they will return to growth in 2020. He bases his prediction on rising auction clearance rates and loan approvals, additional interest rate cuts, first home buyer grants and rising incomes - factors which he thinks should stimulate the market in 2020.

• 2020: 0-4% growth in house prices

"HSBC Chief Economist Paul Bloxham predicts house prices to stabilise by the end of 2019 and believes they will return to growth in 2020"

Domain

Economist Trent Wiltshire

Domain's Property Price Forecast is a little more cautious, predicting that property values in Australian capital cities will stabilise by the end of 2019 and record modest gains in 2020.

Economist Trent Wiltshire points to three key events that have helped shake off the caution with property buyers, namely the recent interest rate cut, APRA's relaxed lending criteria and and a reinvigorated Coalition government with Scott Morrison at the helm.

• 2019: 1% growth in dwelling values
• 2020: 2-4% growth in house values and 1-3% growth in unit values

ANZ

Economists Felicity Emmett & Adelaide Timbrell

ANZ's Economists Felicity Emmett and Adelaide Timbrell share HSBC's outlook, with the remainder of 2019 likely to see a bottoming out of the market. They point to the tightening of lending criteria as the, "...major driver of weakness" in the recent market downturn. An oversupply of new apartment stock could however see unit prices fall nationally by a further 5% during the remainder of 2019.

This improving affordability could actually help stimulate the market, though they caution against expecting a significant turnaround. Overall they are cautious when it comes to capital city performance and predict losses in 2020, albeit by smaller margins.

• 2019: -5% fall in dwelling values
• 2020: -1% fall in dwelling values

"ANZ economists point to the tightening of lending criteria as the major driver of weakness in the recent market downturn."

Citi Research

Senior Economist Josh Williamson

Citi is also moderately optimistic and forecasts Australian home prices to rise by the end of 2020. Senior Economist Josh Williamson believes they will also start to stabilise by late 2019 or early 2020. This is after capital cities shed -10.3% since their peak in September 2017, and the overall national market dropped -7.9% over the same timeframe.

Williamson also believes APRA's more relaxed appraisal of new loan applicants will provide some incentive for buyers to return to the market in 2020.

• 2020: 3% growth in house prices by December 2020

Moody's Analytics

Economist Katrina Ell

Moody's Analytics' second quarter 2019 Housing Forecast Report also predicts a modest rise for house prices in 2020. They also have a positive medium term view, forecasting a -7.8% drop for national housing prices in 2019, with prices rising +2.2.% in 2020, and +4.7% in 2021.

• 2019: -7.8% drop in dwelling values
• 2020: 2.2% growth in dwelling values
• 2021: 4.7% growth in dwelling values

Looking into a crystal ball: 2020 house price predictions

Just remember that these are only predictions, though they are being made by analysts who use a range of economic data, property market metrics and macroeconomic indicators to make their forecasts.

"Analysts are unanimous in that there is cause for optimism and that markets will begin to recover in 2020"

As you can see, they are unanimous in that there is cause for optimism and that markets will begin to recover in 2020. However, only time will tell what the new year holds, and if the market is capable of reversing the current trend and return to a positive state in the immediate future. This will depend on a range of factors including how the local economy performs, wage growth and other global economic variables.