Did the new year renew your clients' property ambitions?

What a difference a year makes. When we reflect on housing and lending in 2019 there is a theme of uncertainty. The property market took a downward turn, and financial institutions got hauled before the public to explain a myriad of practices that subsequently caused the regulator to impose stricter rules on investor and interest-only loans. The confluence of these two factors injected concern into the minds of buyers and borrowers. But much has changed since then and subsequently borrower sentiment and determination to enter the market has re-emerged. 

What now for borrowers and buyers in Q1 of 2020?

The saving grace for aspiring buyers in 2020 is that while they may have missed the boat on snapping up a downturn-bargain, stock levels are still low. What that suggests is that vendors who may have intended to sell in the last six months have held off due to pricing uncertainty, creating an undersupply of properties for buyers looking to make the most of low rates and looser lending rules. In theory, as more vendors become convinced of the market’s buoyancy on pricing and bidders, we should see greater supply of properties on the market in the first quarter of 2020, giving buyers a better chance with both variety and price. 

I think we need to take a minute to look at the numbers. They’re astounding. It’s almost surreal to witness the property market ticking upwards again with such vigor, don’t you think?

Today, Sydney and Melbourne prices are leading the upward charge, bringing Australia's national property prices back into positive territory for the first time since April 2018. On top of that, interest rate cuts in June, July and October coupled with a relaxation of lending rules by the authority have created a charge of loan approvals.

Let’s look at the micro city markets. Only six months after the sharpest downturn in its history where median house prices sank 17 percent, Sydney's median house price rose by 3.1 percent in November, recording the biggest monthly surge in Australia's biggest city in three decades. Median house prices are now very closely approaching that pivotal $1million mark for the first time in more than two years.

That’s not the only noteworthy turnaround. The area that won the title of Australia’s worst performing housing market in 2018 - Melbourne's Inner East - is now the best, with values up eight percent during the past year. These two cities most affect the nation’s averages.

Clients of yours who are talking about investing in property will likely be champing at the bit to get in while terms are in their favour, but that fundamental issue of low stock (whilst empowering pricing wars and resulting in value growth) has made it difficult for many buyers to make a successful bid. That should change, as I mentioned, with vendors seeing evidence of health return to values across the nation. Yes, Western Australia is still lagging due to an ongoing oversupply, though economists are commenting that population growth is starting to lift and should absorb some of that excess supply.

Financial market pundits are also expecting the Reserve Bank of Australia to cut rates from 0.75 percent now to a new record-low of 0.5 percent somewhere in the early part of this year.

Want me to work with you and your clients on their buying plans in 2020?