Following a year of two halves for property investors in 2019, strong momentum is tipped to drive markets in 2020, according to a finance expert.
Mozo property expert Steven Jovcevski believes the good times will continue in 2020 as the market regains its losses from the previous years.
“2020 will be a predominantly positive year for the Australia property market, which will be a relief to home-owners and investors alike who endured a tough 2019,” Mr Jovcevski said.
Spurred on by government initiatives in 2019, Mr Jovcevski reminded investors that these policies will help markets recover from previous falls.
“RBA cuts typically take 18 months to impact the property market, and federal market factors such as the 7 per cent benchmark for serviceability being scrapped and the investor interest-only loan cap being abolished will also greatly aid market recovery.”
“Interest rates between home owners and investors are expected to narrow, which will drive property value growth across the board,” Mr Jovcevski said.
Mr Jovcevski believes most capital cities are set to enjoy a growth in value, with the exception of Darwin.
Sydney – property market increase of 12-14 per cent
Australia’s most expensive capital city is tipped to widen its gap at the top of the market, with Mozo tipping it to be the strongest performer in 2020.
The Sydney market is carrying strong momentum from the end of the year, which saw growth of 2.7 per cent in the month of November, with Mr Jovcevski believing this momentum will continue into the new year.
“While 12-14 per cent growth may seem like a bold growth estimate, Sydney experienced a drop of 15 per cent over the past few years, so there is a recovery element to the sizeable growth predicted,” Mr Jovcevski said.
Melbourne – property market increase of 10-12 per cent
Having a more accessible price tag to Sydney, Melbourne has a healthy balance of first home buyers and investors, according to Mr Jovcevski.
The market is tipped to have a few factors in its favour to encourage investment from first home buyers, including the removal of stamp duty pending property values as well as the rollout of the national property scheme.
“In the next year, it is predicted to grow in value by 10-12 per cent. The top end of Melbourne is now performing particularly well, with Eastern Melbourne increasing by 8 per cent in property value in November,” Mr Jovcevski said.
Canberra – property market increase of 6-7 per cent
The nation’s capital is tipped to continue strong growth, with the influx of government employees continuing to stimulate the local property market.
Vacancies in Canberra remain at 1 per cent, allowing for strong yield and strong fundamentals for potential investors.
“In 2019, the capital city was one of the best performers, rising by 2.9 per cent, despite most other major metropolitan areas taking a dramatic drop in value. With a median property value of $700,000, it remains an affordable and stable option for investors,” Mr Jovcevski stated.
Brisbane – property market increase of 4-5 per cent
Houses in Brisbane continue to show signs of growth, increasing by 0.94 per cent in November. However, apartment prices are continuing to lag as oversupply pushed prices down by 0.31 per cent for the month of November.
In 2019, Brisbane experienced a flat year with a 0.52 per cent. However, November saw a 0.83 per cent growth, which indicates things are picking up. Brisbane property within a 5-10 km radius of the CBD are outperforming the rest of the capital.
“Market growth is predicted in 2020 as both first home buyers and investors look to purchase in Brisbane after feeling locked out of more expensive parts of Australia,” Mr Jovcevski explained.
Adelaide – property market increase of 3-4 per cent
Adelaide is a stable, slow and steady market for property investors following losses of 0.46 per cent drop last year, meaning the market remains essentially flat.
With vacancy rates lower than Canberra at 0.8 per cent, investors looking to cash in some of their returns from the east coast might be looking inland, according to Mozo.
“Adelaide property prices make for a much more affordable investment. While it’s been a slow year for the wine region, things will certainly pick up in 2020,” Mr Jovcevski said.
Hobart – property increase of 3-4 per cent
Australia’s southern capital has been a staple for savvy investors who have cashed in on the unprecedented growth over the last five years.
While Hobart boasts the lowest vacancy rates in the country at 0.5 per cent, the rent-to-income ratios remain tight, as Hobart is one of the most expensive cities in Australia to rent right now.
“For this reason, it remains doubtful that prices will significantly rise, but the city will enjoy slow and steady growth,” Mr Jovcevski said.
– property increase of 3-4 per cent
In the nation’s west, Perth has seen the flows of economic activities, which has seen Perth rise to the richest city in Australia, only to have property values halve over the next decade.
Things are looking to pick up in the western seaboard capital as reduced vacancy will tempt investors back into an already affordable housing market.
“November saw a minute increase of 0.36 per cent, and it’s predicted property value will build momentum in the new year,” Mr Jovcevski said.
Darwin – property market decrease of 6 per cent
Property owners in the north have seen significant falls in property values with a further reduction of 10.87 per cent in the last 12 months.
An oversupply of apartments means rental yields remain low, with value falling by 7.72 per cent for the month of November, while houses dropped by 1.83 per cent.
“A much needed boost in population is unexpected as the resources sector that underpins the local economy continues to struggle, Mr Jovcevski concluded.