Tuesday, 6 November 2018

What economists predict for Australian house prices in 2019




Share on twitterby Ingrid Fuary-Wagner

As property values fall across the country, interest in the future direction of prices – particularly as many Australians contemplate whether it's the time to buy, hold or sell – has never been stronger.

After a meteoric rise in Sydney prices over the past five years, aided by a fear of missing out by both investors and owner occupiers, property prices quickly changed tack midway through 2017, catching many experts by surprise.

In the middle of last year, several top economists were predicting house prices to in fact increase in 2018 - one forecasting as much as 9 per cent, but since then house prices have experienced their largest and longest peak to trough decline in recent history spurred on by increased housing affordability constraints, a banking royal commission with a microscope on lending standards, and APRA's restrictions on new investor loans.

Now that the price falls are well and truly in motion, all five economists recently surveyed by The Australian Financial Reviewforecast national house values would continue to drop in 2019, withSydney, the epicentre of the downturn, dragging down the national average.


View image on Twitter



Cameron Kusher@cmkusher

As at Oct-18 this chart shows the premium for median house values vs median unit values. Note how much greater the premium is in Mel, Bne, Adl and Can compared to a market like Syd.

Stephen Koukoulas, of Market Economics, was most downbeat about the state of the property market, with expectations prices would fall in Sydney between 7.5 per cent and 10 per cent in 2019 after a drop of 7.5 per cent in 2018.

Nationally, he predicted house prices would fall by between 5 per cent and 7.5 per cent.

"From the 3rd quarter in 2019, I am forecasting some stability in prices as supply and demand forces underpin new activity," Mr Koukoulas said.

By then he expected cashed-up first-home buyers would be lining up to take advantage of increased levels of affordability.

While each economist offered a variation on how much prices would fall in 2019, each attributed the tightening of credit, rising mortgage rates, and a surge in new supply to the further softening of the market.
Property values fell 3.5 per cent nationally over the year to October. CoreLogic

Shane Oliver, chief economist at AMP Capital

1. How much will national house prices rise or fall across 2019? I expect them to fall about 4 per cent ...but this to be concentrated in Sydney and Melbourne.

2. How much will Sydney house prices rise or fall across 2019? I expect Sydney prices to fall by around another 7 per cent in 2019.

3. What are the key considerations for your view? The key drivers of the continuing fall in house prices are likely to be ongoing tight lending standards, increasing supply in Sydney and Melbourne, reduced foreign demand, reduced investor demand in response to proposed tax changes under a possible Labor Government and reduced capital growth expectations possibly feeding back into reduced property demand.



A key issue at some point in 2019 is whether the RBA may be forced to consider another interest rate cut if the slump in home prices starts to impact consumer spending and the outlook for inflation.
Stephen Koukoulas, managing director of Market Economics

How much will national house prices rise or fall across 2019?Down 5 per cent to 7.5 per cent after a similar fall in 2018

How much will Sydney house prices rise or fall across 2019?Down 7.5 per cent to 10 per cent after a fall of around 7.5 per cent in 2018.
AMP Capital's Shane Oliver predicts prices to fall nationally by about 4 per cent in 2019.Louie Douvis

What are the key considerations for your view? The drivers behind weaker prices in the next six to 12 months are clear – a tightening in credit, generally rising mortgage interest rates and a surge in new supply and poor rental yields.

The fact the RBA is unwilling to cut interest rates will make the decline more severe and in a feedback loop, undermine economic growth and employment and with that housing demand.

From the 3rd quarter in 2019, I am forecasting some stability in prices as supply and demand forces underpin new activity. The bottom line is that the falls will be significant, but will not completely undermine the economy.
Ben Jarman, senior economist at JP Morgan
By the third quarter of 2019, Mr Koukoulas forecasts some stability in prices. Daniel Munoz

1. How much will national house prices rise or fall across 2019?We think nationwide house prices will fall about 5 per cent next year, similar to this year.

2. How much will Sydney house prices rise or fall across 2019?Sydney will probably underperform and be down a little more than that: between 5 per cent to 10 per cent next year.

3. What are the key considerations for your view? Financial conditions are tightening, with borrowing capacity reduced and mortgage rates averaging higher. Plus there is plenty of new stock still hitting the market, particularly higher-density dwellings.
Trent Wiltshire, Domain economist

1. How much will national house prices rise or fall across 2019?Australian house prices to fall about 2 per cent in 2019.

2. How much will Sydney house prices rise or fall across 2019?Sydney house prices to fall about 4 per cent in 2019.

3. What are the key considerations for your view? Tighter lending conditions have contributed to slower housing credit growth. Owner-occupier housing credit has only slowed a bit, and accelerating price falls may further deter investors, further pushing down prices.

The 'wealth effect' of falling house prices on consumer spending is pretty small, but significant price falls will impact spending. If the ALP win the upcoming election, they'll be wary of introducing their negative gearing policy if price falls are continuing at their current rate, as this will add to downward pressure on prices.
Ben Jarman of JP Morgan says Sydney will underperform in 2019. Nic Walker

Mortgage rates are edging up slightly and if this continues, the RBA, despite indicating they want to avoid it, may consider cutting rates.
Geordan Murray, HIA acting principal economist

1. How much will national house prices rise or fall across 2019?For the remainder of 2018 prices will fall about 1 per cent and then about another 1 per cent drop over 2019.

The median has now been steadily declining for a year and is 3.1 per cent below peak recorded in October 2017. This would take the median price back to the levels that we saw around late 2016 and early 2017 and would equate to a 4 per cent to 5 per cent decline from the peak.

2. How much will Sydney house prices rise or fall across 2019?

Sydney's median house price is projected to fall 3.5 per cent in 2019. This would leave the median price around 12.5 per cent to 13.5 per cent lower than the peak recorded in mid-2017 and leave price levels similar to those in the second half of 2016.

3. What are the key considerations for your view?

The regulatory interventions by APRA changed the lending environment kick-started the downturn. Initially investors were pushed to the sidelines and these are now starting to impact owner-occupier activity. The down cycle still has momentum and prices are expected to ease further as we progress into 2019.
Trent Wiltshire, economist at Domain, says Sydney house prices to fall about 4 per cent in 2019.
While it is slowing, population growth remains strong and will ensure ongoing demand for housing throughout the cycle.

The labour market has been improving and is projected to continue to do so. This should contribute to further modest improvements in wage growth. There are risks around borrowing costs.
HIA acting principal economist Geordan Murray says median prices would go back to 2016 levels. Supplied

Whether you are a buyer, seller, broker, agent, investor, lessor or renter you can benefit from attending one of our two free Real Estate Seminars in Bali this month.

At these seminars PT. B.A.L.I’s Canadian President, Lawrence, a 22 yr. Bali resident, President of 14 yr. old company with 135 staff, married to Azizah, a fully Licenced Notaris will review the most recent real estate laws for Indonesians and Foreigners in detail.
Bali seminar attendees January 2018

Then they will also provide a full colour audio, visual presentation with many professional charts on the Past, Present, and Future of  Bali Real Estate.

Free Seminar Schedule:

Location: Bali, Emerald Villas, Jl. Karangsari, # 5, Sanur, Bali, Indonesia. 

Dates & Times:
  1. Thursday - Oct 4th. 6:30 PM - 7:45 PM
  2. Saturday - Oct 6th. 2:00 PM - 3:15 PM.

Seminar Topics:

At these seminars you will learn about:
  • The Past, Present and Future of Bali, Indonesia, Asian and Australian real estate.
  • Why a recent official clarification of foreign ownership laws allows foreigners to totally control Indonesian properties for up to 80 years without leases? 
  • How to avoid legal problems and make sure a property is safe. 
  • How to avoid complicated real estate laws affecting Indonesians married to foreigners. 
  • Why this is the second best time to buy this century. 
  • Where are the best locations to buy for maximum profits? 
  • What type of properties will offer the best investment potential of *10% to 20 % per year? 
  • Discover how you can sell your property fast for the highest prices and lowest commissions on a brand new web site designed after the largest most successful real estate site in America with high tech search features. 
  • An opportunity for a free listing on B.A.R.E. First Class Beachfront property at almost 50% discount. 
  • A Quality 5,000 m2 Bali Hotel with 12 bungalows, 3 pools and Restaurant for only $588,000. 
  • Low cost properties with Luxury Villas starting as low as $158,000 for a three bedroom 650 m² 3 bedroom, 4 bath with private 9 mtr. Pool. 
  • Ridiculously low priced ocean view building lots starting as low as $25,000 for 500 m².
  • Brand new Bali Luxury Retirement Villas starting at $208.00 per mth.

Limited Seating & Free Parking: Seating is very limited for these free seminars so please avoid disappointment and make reservations A.S.A.P. Click Here For a Reservation Or Email: seminarsptbali@gmail.com or Tel: Office: 62-361- 284069 For Bahasa English 62-8123814014 – Bahasa Indonesia or 62-8123632177

No comments:

Post a Comment

Free Bali Real Estate Seminars - Jan.2019 - Latest Laws - Earn *10 -20% Yr.

Buyers, sellers, brokers, agents, investors, lessors or renters will benefit from attending one of our two free Real Estate Seminars in Bali...