Predictions for the Property Market in 2020

As a new decade begins, what’s in store for homebuyers and property investors in 2020? Shore Financial CEO, Theo Chambers, gives his views on what to expect from the property market over the next 12 months.

Property analysts predict that the housing market revival will continue this year. What will this mean for sellers and homebuyers?

More stock levels of property are expected in 2020, another rate cut from the RBA dropping to another all-time record low of 0.50%, signs of the economy strengthening — which all point to a strong year in property prices. 

We could easily see a 5–10% increase in prices, especially given the easing we saw earlier last year and 2018.

Sellers should be strategic about when they sell, trying to avoid marketing over school holidays and generally always best in either autumn or spring. Although finding something to buy in recent years has become much harder than having to sell one, it’s definitely best finding what you want to buy prior to selling even if generous offers are being made on your property. 

Buyers should try to make a move on something they like ASAP. Don’t wait to take your property of interest to an auction. Make a strong and decent offer prior to see if you can take the property off the market and prevent other buyers from coming in to compete late in the campaign. Often what someone is willing to pay at auction can end up being a lot more than what they would’ve paid prior as emotions take over.

The First Home Loan Deposit Scheme has kicked off. What can homebuyers expect on the first few months of 2020?

The First Home Buyers Scheme will definitely give more confidence to buyers. However, in certain areas, it might be tough to find a property that is within the property price threshold of $700K. Most one-bedroom apartments now in the North Shore and eastern suburbs are more around $800K. 

If first-home buyers want to take advantage of the lenders’ mortgage insurance (LMI) being waived, they may be forced to look at cheaper properties in different areas. LMI is insurance that protects the lender in the form of a one-time payment a borrower makes during the loan settlement. 

Alternatively, there are other ways we can waive mortgage insurance ourselves through certain finance offerings.

Beyond homebuyers, talk us through how the First Home Loan Deposit Scheme will affect prospective investors.

Essentially, investors might have more competition for properties priced at $700K or less as affordability for these properties amongst first-home buyers has increased now that the government has offered to waive mortgage insurance. 

It might be easier for investors to target properties above these first-home buyer threshold where the various concessions to LMI are being waived grants and stamp duty discounts/exemptions aren’t applicable. 

Can we expect another rate cut earlier this year? What will this mean for home loans? What will this mean for the national economy?

It’s looking quite certain that there will be another RBA rate cut this year. Question is how much will the major lenders even pass on as 0.10–0.15% has been the recent amounts some lenders pass on, which isn’t that much of a difference to borrowers’ interest costs. 

We’ve already seen the bulk of slashing consumers interest costs. In the past nine years, we’ve seen the cash rate go from 4.75% to 0.75%, which is a huge change, and it was only a few years prior to that in the GFC when we saw a 7.25% cash rate. 

The question that people need to ask is what is going to happen when the cash rate starts rising, although that doesn’t look like it’s happening any time soon. 

What are other important trends that you see will impact homebuyers this year?

The US federal election could affect home buyers and the election, as the whole world is linked to the US economy, especially when it comes to equities and the stock market. 

Confidence locally stems directly from confidence overseas in so many different ways, and if there is huge uncertainty in the US like there has been recently, then that can definitely impact the Australian economy. 

Our ASX has only just recently recovered to where it was pre-GFC whilst the US economy has more than doubled to where it was prior. Whilst some may say that shows the strength of their economy, many argue there are some bullish valuations floating around in the US and a correction may be due. 

It has also been 12 years now since the GFC, and typically we see a significant correction in the share market every seven to eight years, so one may be on the cards in 2020.

Conclusion: 2020 Vision for the Property Market

With record-low interest rates, improved lending conditions, and recovering house prices, the future of the property market certainly looks very interesting. If you’re aspiring to buy your first home or next property investment, seek strategic advice from Shore Financial.


Disclaimer: This is general information only and should not be taken as financial advice. Please speak to a Shore financial planning professional before making a decision on your home loan.

Get in touch with Shore Financial today and maximise your opportunity through property!

  • Levels 3 & 4, 153 Walker Street
    North Sydney, 2060

  • 1300 416 700

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