The future of property prices

property

You’ve heard me before refer to Louis Christopher from SQM Research. I’ve known him for a long time and really respect his forecasts when it comes to property. He’s sort of my go-to-guy on property.

This week he released his Christopher’s Housing Boom And Bust Report 2020 and it is fascinating reading on where property prices are going.

Most of Australia’s capital cities will benefit from the interest rate cuts and loosening of credit restrictions to record dwelling price rises over 2020 with Sydney and Melbourne leading the charge, according to the report. 

The base case forecast is for dwelling prices to rise between 7-11 per cent, which is a strong bounce back from the price falls recorded over 2018 and the first half of 2019.  

Sydney and Melbourne will drive the rises. The forecast is for Sydney to rise between 10-14 per cent and Melbourne 11-15 per cent. Other cities are also expected to record price rises.

ACTUALS2020
Scenario 1
(base case)
2020
Scenario 2
2020
Scenario 3
2020
Scenario 4
City/Region
  • 12 months to 31 Oct-2019
  • All Dwellings

Source: Corelogic

  • Cash rate unchanged at 0.75%
  • Economy recovering
  • AUD ranges between US$0.65–US$0.75
  • NO APRA Intervention until late 2020 at the earliest
  • RBA cuts to 0.50% by April 2020
  • Trade wars tentatively stabilised
  • Economy stable 
  • No APRA intervention 
Same as Scenario One HOWEVER:

  • APRA Intervention occurs MID 2020
  • Trade talks collapse
  • Economy weakening
  • RBA cuts cash rate to zero by end 2020. 
  • QE starts
Perth-8.7%+3% to +6%+4% to +7%+3% to +6%-6% to -2%
Brisbane-1.1%+3% to +6%+4% to +7%+3% to +6%-3% to +1%
Darwin-9.2%-5% to -2%-4% to -1%-5% to -2%-7% to -3%
Melbourne-1.0%+11% to +15%+12% to +17%+5% to +9%0% to +4%
Sydney-2.5%+10% to +14%+11% to +16%+4% to +8%0% to +4%
Adelaide-0.9%+1% to +4%+1% to +4%+1% to +4%-2% to +2%
Hobart+2.6%+5% to +8%+6% to +9%+4% to +7%+3% to +6%
Canberra+2.0%+3% to +7%+4% to +8%+2% to +5%+4% to +7%
Capital City Average (weighted)-2.5%+7% to +11%+8% to +13%+4% to +7%-1% to +3%

Source: Christopher’s Housing Boom and Bust Report 2020

The base case forecasts assume no changes in interest rates and, importantly, no intervention by the Australian Prudential Regulation Authority (APRA). The base case also assumes a recovering Australian economy that has responded to the rate cuts of 2019 and reduced international trade tensions. One that is also been driven by ongoing strong population growth rates. 

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