The property market is showing signs of strength as we start a new year. Sydney and Melbourne housing prices rose strongly in the final few months of 2019 and prices in other capital cities also improved.
The about-turn in the property market has been supported by lower interest rates, with the Reserve Bank of Australia (RBA) cutting the cash rate three times since mid-2019. Macquarie expects one more 0.25% cut in early 2020 to bring the cash rate down to 0.5%, which should further stimulate the market.
There has been some conjecture that the sizeable increases in housing prices in Sydney and Melbourne have been the result of thin sales volumes. However, sales volumes have strengthened and Macquarie expects volumes to rise further as rising property prices give sellers more confidence in the market turnaround.
While the domestic economy was unexpectedly soft in 2019, it’s anticipated Australia’s GDP growth will look a bit better as 2020 progresses, which should also help support the property market. While Australia’s unemployment rate has risen modestly, at 51⁄4% it still remains low in an historical sense.
In this issue of the Macquarie Property Insights Report, we take a look at how Australia’s property market performed in 2019 and the key factors that will drive the property market in 2020, with the help of Macquarie’s senior economist Justin Fabo.