While our property markets are entering a new property cycle, currently there are lots of mixed messages in the media – some positive and many negative.

This has led to many viewers of our regular Property Insiders videos and listeners to our podcasts leaving questions and asking for clarification.

In my chat with leading housing economist Dr. Andrew Wilson today I’m going to ask him to answer these questions which, if you’re interested in property, are likely to be on your mind also.

1. Is Australia going to fall into recession in 2020?

During 2019 the RBA realised that the Australian economy wasn’t as rosy as it had hoped.

The labour market deteriorated, unemployment rose, incomes growth languished, inflation failed to increase and our GDP slowed down despite 3 interest rate cuts.

It was really only mining sector and government spending that kept our economies head above water.

But as the year finished off, the latest labour market data at the end of the year showed a slight fall in unemployment and jobs growth albeit mainly part time jobs.

But there are now signed of an improving global economy, particularly driven by the string US economy.

All this makes an Australian recession in 2020 very unlikely

 

2. What is likely to happen to interest rates in 2020?

While rates are likely to be cut again twice again in 2020, it is now more likely that the RBA will hold off cutting interest rates in February as many commentators are predicting.

Their decision will depend on the end of year economic data that will be published in February and March.

3. Will the strength in the Australian property markets continue in 2020?

The auction markets finished 2019 strongly indicating plenty of home buyer and seller confidence.

Other factors that will underpin strong property markets especially in Sydney and Melbourne include:

•    The First Home Buyer Scheme that came into effect on January 1st

•    The prospects of further interest rate cuts during the year

•    Fear of Missing Out – as the markets rise strongly

The missing link at present is investor activity. Investors are keen to get into the market, but many are having trouble getting finance due to restrictive bank lending practices.

4. What will be the major influencers of our property markets in 2020?

Just as lack of confidence held back our property markets at the beginning of 2019, strong market confidence will be one of the main driving factors of our property markets in 2020. Particularly the Melbourne and Sydney property markets

Other factors that will lead to continued property price growth include:

•    Pent up demand as property values in Melbourne and Sydney retrace their lost ground. These markets should reach new price peaks in the first half of 2020.

•    Supply and demand – our population keeps increasing, but there is now very little new dwelling construction in the pipeline which will create a shortage of housing.

•    Falling interest rates over the first half of the year

•    A slowly improving Australian economy.

The bottom line.

The opportunity to take advantage of the beginning of a new property cycle only comes around a few times in your lifetime.

Strategic property investors and smart home buyers will take advantage of the opportunities the property markets present in 2020.

 

With thanks to PropertyUpdate.com.au and MyHousingMarket.com.au