Prices will continue to rise in most Australian capitals in 2020, as markets recover from a tumultuous previous 12 months.
The new month in review report from independent property valuers Herron Todd White, released on Monday, revealed which cities and regions across Australia are at their peak, those that are currently in a rising market, those that are at the bottom of their market and those that are now declining.
Using a “property clock”, HTW’s analysis revealed that Canberra and the Sunshine Coast were at the peak of the market while Hobart was still in a rising market. Melbourne, Sydney and Brisbane were at the start of a recovery, while Adelaide, Darwin and Perth markets were bottoming out.
HTW executive director valuation and advisory Drew Hendrey said the outlook was positive for the rest of the year.
“We’re optimistic,” Mr Hendrey said.
“Last year there were distinctly two halves to the year,” he said. “The first two quarters were flat, almost dead because of the Hayne report [financial services royal commission] and the federal election in May.
“Then quarter three and four picked up again. While it’s early days, some of the fundamentals have been carrying through this year a lot stronger,” he said.
Predictions are that one of the strongest performers will be Sydney where house prices will reach a new peak, surpassing that of 2017, by the end of the year.
Hobart should reach its peak house price, after years of stellar performance, while Melbourne will continue its strong recovery.
House prices in Sydney will increase by 10 per cent for the year, beating the previous peak in 2017, Mr Hendrey said.
“It’s great if you’re holding property and you’ve already entered the market but daunting if you haven’t,” Mr Hendrey said. “I think we’ll pretty quickly be talking about affordability again.”
“We’ll also see some fairly good growth in the prestige market that always seems to kick off,” he said.
The report predicted listings would continue to increase for the first half of the year, while price growth would begin to flatten out despite the record prices.
Historically low interest rates that would stay low for longer were helping to boost the local market, Mr Hendrey said.
So, too, was Melbourne’s booming population growth – he said a strong recovery would continue for the first half of the year for Melbourne.
Apartment demand would also remain steady, although experts were watching possible oversupply, particularly in suburbs such as South Yarra, Richmond, St Kilda, Abbotsford and Collingwood.
“I’m optimistic it won’t tip into any areas of concern,” Mr Hendrey said.
The coming year was looking positive for property in Brisbane, Mr Hendrey said.
“Brisbane will have a good year off the back of the growth in Sydney and Melbourne,” he said.
Though the end of the mining boom and lack of interstate migration had taken a toll over the past decade, there were signs the market was turning around.
People were starting to move again, with retirees boosting migration numbers.
The oversupply of apartments, which took its toll on the market in recent years had also started to be absorbed, he said.
Mr Hendrey said there were some downsides, with tighter lending rules from the banks continuing to impact prices. Changes to rental laws in Queensland, including banning no-grounds evictions, could also have an impact on price, he said.
Perth has been through a boom-to-bust market and the past seven years has seen “plenty of pain for buyers and sellers”, Mr Hendrey said. However, he said 2020 was offering some hope.
“When you really look at Perth, it’s driven by money being spent in the mining and resource centre,” Mr Hendrey said.
“If we can expect anything for 2020 for Perth it’s looking for signs of a rebound and seeing it pick up again.”
Like Perth, Darwin had also been through a boom-to-bust market.
Predictions were that 2020 would see a continuation of the previous tough few years for the Darwin residential property market.
However, with some big projects including the $200 million CBD revitalisation and a new Charles Darwin University campus, hopes were high that these would have a flow-on effect for business and therefore an uptake in CBD dwellings.
“The best we can hope for in 2020 is to see it turn around,” Mr Hendrey said. “That would be a good outcome.”
While Canberra’s population has been growing, Mr Hendrey said this would not be a significant factor in house price growth.
Predictions were that Canberra’s market would stay consistent throughout the year.
“We’re not expecting any significant changes in 2020,” Mr Hendrey said.
There was some hope from experts that the record sale price, at 30 Mugga Way, Red Hill, selling for $5.85 million in 2019, would be broken this year.
Hobart’s property prices should peak by the end of the year, Mr Hendrey said.
“It would be surprising to see it peak past 2020,” Mr Hendrey said. “In the hot suburbs of Hobart, you’re starting to see it reach Melbourne prices.”
This could see less interest from people looking to buy there for a tree change, he said.
Population growth, which was strong in comparison to other capitals, would help keep prices buoyant.
Adelaide was expected to continue its smaller growth – which rose by 1.1 per cent over 2019, Domain data showed.
“Realistically it will be the same again,” Mr Hendrey said.
“They did have some cranes in the sky throughout last year so there will be a little more stock in the CBD to be soaked up,” he said.
“There will be no significant change in Adelaide in 2020,” Mr Hendrey said.