Housing Market Trends 2020

by AB02 Mar 2020

Australian Broker talks to Michael Yardney, founder and CEO at Metropole Property Strategists, and Stephen Moore, Choice CEO, about the “continued confidence” in property markets and other key housing trends for the year ahead

Commsec recently released its latest quarterly report comparing housing data with decade averages – or the ‘normal’ performance – for each state and territory.

In six of the states and territories, as compared to four previously, the housing finance commitments trend was above decade averages. Additionally, in all states or territories except the NT, the home loans trend was above the levels of one year ago.

Overall, Victoria remained the best-performing economy, while Tasmania claimed the second spot, with NSW close behind. Separated by a wider margin, ACT came in fourth.

According to Michael Yardney, founder and CEO at Metropole Property Strategists, the latest finance commitments reflect the continuing confidence in property markets and increased interest from all buyer segments, but particularly owneroccupiers and first home buyers.

Yardney says, “While investor activity has also picked up, it is showing milder gains and our experience at Metropole suggests this is because property investors are still finding it difficult to borrow because of the banks’ tighter lending criteria.”

“My advice for brokers is to get on the front foot and be ready to jump on business growth and opportunity” Stephen Moore, CEO, Choice

However, he suggests it must be remembered that this rise in finance activity comes after a prolonged period of below-average lending that bottomed in mid-2019 before the general election.

“These figures only confirm the widely publicised property pricing data that shows the strength of the upturn in our housing markets, particularly in Sydney and Melbourne, which saw the biggest slumps in 2018–19,” Yardney says.

“Finance approvals are a leading indicator and suggest that our property markets will remain strong in 2020, particularly in light of the looming shortage in the new construction activity to supply the stock required to house the growing demand.”

Choice CEO Stephen Moore says, “Both Victoria and NSW capital cities have performed well and are expected to do so throughout 2020. Hopefully what we will see is steady growth rather than any dramatic price surges. I think we would all prefer to see steady price growth rates of around 5% rather than unsustainable jumps followed by negative growth.”

He points out that negative growth is particularly unhelpful for home loan customers given the impact on valuations, which can hinder their ability to get a better home loan deal.

He adds, “The last 12–18 months provided clear evidence of the cyclical nature of the property market and hence the lending market. In the current cycle, we are now in a period of growth in most states.

“My advice for brokers is to get on the front foot and be ready to jump on business growth and opportunity.”