5 Key 2020 Trends in the Australian Real Estate Market

So what will happen in the Australian property market in 2020? 

Our dedicated research team have closely monitored data from more than 50 authoritative institutions across Australia. This insight, along with our market experience over the last decade has allowed us to utilise our knowledge to provide investors with data-driven insights into the market from a long-term perspective.

According to Ironfish’s Head of Property, William Mitchell, here are six key trends to watch.

1. Positive signals from all six Australian cities

Each major Australian city operates under its own market conditions and growth cycles. Since the new year, Australia has seen a rare trend with all six major Australian cities showing positive signs. Buyers across each major city are becoming increasingly active, and this is a positive sign of things to come. With an uptick in buyer enquiry, usually comes activity – which can be a leading indicator of capital growth. Notably, property experts in Perth are seeing an increase in enquiry and buyer activity which is a great sign for the local market, and an indicator that this market is heading towards more positive conditions in 2020.

2. Increasing access to credit

In addition to the influx of buyer enquiry, mortgage brokers are also seeing an increase in the number of loan enquires. This is another leading indicator that buyers in the market are getting prepared to buy property over the coming months. Brokers are also commenting that access to finance is becoming easier, albeit slowly. Should this access to credit continue to increase, so too should demand for property. This will be a key trend to watch in 2020, as access to credit usually has a direct impact on the property markets across Australia.

3.  First home buyer market is growing in strength

The Federal Government’s 5% first home loan deposit scheme started on January 1, 2020. The scheme is limited to 10,000 places per year. However, by the end of January, banks have already registered 5,500 potential first home buyers under the First Home Loan Deposit Scheme. This demonstrates a significant demand from this buyer segment, and is an excellent sign that first home buyers will be active in 2020. Although not all first home buyers will be able to access the Government’s scheme, there are still many other state and Federal incentives for First Home Buyers. Interestingly, First Home Buyers have an impact on the entire market, as they often buy existing property, freeing up that seller to upgrade into a more substantial home. This can help to stimulate the entire market with new transactions.

4. Low supply in the short to medium term

In the last few years, changes to planning policies, market uncertainty and most notably the difficulty in securing development and construction loans have led to the significant decline in new housing projects across Australian cities. These changes have directly contributed to reduced supply of housing. Already this impact has been felt, with Melbourne, the Gold Coast, Brisbane, Adelaide and Perth all registering undersupply vacancy rates (under 3%). 2020 is set to see this trend continue, as supply continues to remain low, the vacancy rates are anticipated to tighten further. This build-up of pressure will continue to translate to rising rents and subsequently rising yields. 

5. Interest rates are likely to fall further

The Reserve Bank cut the cash rate to a historic low of 0.75% in October 2019. This was the third rate cut in 2019. Many economists are predicting one to two more rate cuts in 2020. For property buyers and owners, this means that the cost of holding property will drop to unprecedented lows. This generally encourages prospective home buyers and investors to enter the market with those on the fence also encouraged to take action to take advantage of low interest rates, and what are becoming stronger rental yields nationally.

Ironfish has a dedicated in-house research division that continually monitors the market to present research and analysis for our investors. Take a look through our range of free investor resources which have helped thousands of Ironfish customers invest with confidence in cities all around Australia.

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