One of the big four banks has updated its forecasts for the housing market and when it expects the downward cycle will hit its floor.
ANZ Research has updated its forecasts for the housing market, stating that it now expects dwelling values to “bottom out” in the coming months before returning to positive territory later this year.
“The change in sentiment has been driven by a combination of factors. The RBA has cut interest rates twice, the prudential regulator has eased loan assessment requirements, and the election result has delivered increased certainty around the taxation arrangements for housing,” ANZ Research noted.
“All of these factors have helped to shift sentiment from one of pervasive negativity to cautious optimism.”
However, ANZ stressed that it does not expect a “V-shaped recovery” in the housing market, adding that the continued crackdown on living expenses for mortgage applications and an oversupply of housing in major markets would stunt price growth.
“This all suggests that the recovery is likely to be a fairly modest one,” ANZ Research added.
The group, therefore, has forecast price growth of around 3 per cent in 2020.
These projections are similar to those of BIS Oxford Economics, which released its predictions for the property market earlier this month.
The research house predicts prices will bottom out by year end, but that a price recovery – that is, meaningful and widespread price rices – is still “a way off”.
BIS Oxford Economics predicts that median house prices will remain below their peak in four of the major capital cities over the next three years.
According to the projections, median house prices will remain 14 per cent below peak in Darwin. They will remain 13 per cent below peak in Sydney and 10 per cent below peak in both Melbourne and as at June 2022.