Australia’s residential downturn is expected to reach bottom in most markets earlier than previously expected, with some economists and industry commentators forecasting as early as the end of this year or 2020.
Following the banking royal commission and federal election, CBRE’s recent Australian residential report highlights an increasing number of buyers looking to enter residential markets.
“Which would provide stronger support for prices and bringing forward the cyclical market bottom into 2019,” CBRE head of residential research Craig Godber said.
The Reserve Bank announced it would lower the cash rate from 1.5 per cent to 1.25 per cent on Tuesday, marking the first official rate move since late 2016.
While lower rates, in combination with other recent regulatory measures, will lend further support to Australia's slowing residential market, rising unemployment, high debt and tightening credit still dampens the property market outlook.
Research group Capital Economics has forecast a 3 per cent rise in the housing market next year.
While AMP Capital's chief economist Shane Oliver expects Australia’s housing market next year to be flat after revising peak-to-trough falls to 12 per cent from his earlier forecasts of 15 per cent.
“However, given still high house prices and poor affordability, still very high debt levels, tighter lending standards, and rising unemployment a quick return to boom-time conditions is most unlikely,” Oliver added.
Godber says signs were now emerging that a controlled relaxation of credit constraints could help stabilise property prices.
“The strong likelihood of further rate cuts by the RBA over the remainder of 2019 is expected to boost the prospects of an earlier than anticipated market recovery.”
In its June report, CBRE says it still expects median price peak to trough falls of up to 20 per cent in Sydney and Melbourne as prices bottom in 2019 through to 2020.
“A surprise to us has been the resilience of Melbourne unit prices, but we expect that to change in 2019 and ultimately unit prices will fall 10 per cent to 15 per cent from current levels.”
“In Brisbane, Perth and Adelaide, price corrections will be most evident in unit markets on account of high levels of supply, with house markets in Brisbane and Adelaide still likely to be more resilient.
“Perth houses, after a long period of negative pressure, appear to be close to, if not at, the bottom of their cycle.”
