Survey Finds Positive 2020 Outlook
Housing markets look promising for growth in 2020, with 52% of experts expecting house prices to rise to above their pre-decline levels, according to the latest survey by comparison website Finder. Only 12% of experts expect house prices to fall.
Another positive aspect that home-buyers can look forward to is the possibility of further interest rate decreases. The Reserve Bank will reassess the economic outlook at its first meeting of 2020, leaving some market economists to conclude that it may cut interest rates as soon as February.
The Finder survey also indicates that mortgage defaults (currently, mortgage delinquencies remain low around 1.6%, according to Moody’s) should remain steady. Three-quarters of the experts surveyed say it is unlikely Australia will see a rise in defaults in 2020.
Most of the economists surveyed also said the most promising locations to buy property in 2020 included Brisbane and Melbourne.
Bank Tips Price Rises in 2020
Westpac predicts house prices will keep rising in 2020, although at a slower pace than during the second half of 2019.
The bank’s chief economist Bill Evans believes it will provide a “wealth-associated boost” to the Australian economy through the second half of 2020. Evans says the knock-on effect of this will be a lift in consumer spending. He is forecasting that consumer spending growth will lift from a 1.5% annualised rate in the first half of 2020 to 2% in the second half. Westpac is also tipping two cash rate cuts in 2020.
Evans says Australia’s economic growth prospects are likely to be impacted by a difficult global environment and that business investment growth is likely to remain subdued.
As a result, he expects the Reserve Bank to take monetary policy to new levels over the next 12 months.
The official cash rate is currently 0.75%, following three RBA reductions in the second half of 2019.
Source: Terry Ryder’s Hotspotting, 4 January 2020