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More positive news to start 2020 on a good note!

Real estate will continue to bolster over the next five years as one group predicts growth in median prices.

As 2019 saw the housing market return from its lows, Propertyology expects growth will continue over the next five years.

Although a lot of the growth last year was centred in Sydney and Melbourne, Propertyology head of research Simon Pressley expects the growth will be more widespread.

The firm suggests that in 2020, property buyers should make decisions based on what the medium-term fundamentals say, instead of focusing on today’s market results.

“The 2019 mid-year momentum change in Australian property markets was triggered by the stimulus of tHicks Real Estatee interest rate cuts. It’s a sugar fix of sorts. But it doesn’t change underlying fundamentals,” Mr Pressley said.

“While a quick burst of sugar on occasions doesn’t hurt anyone, we all know that sugar is not a sustainable energy source.

“Those contemplating participating in 2020 property markets would be wise to focus on the fundamentals of a balanced diet.

“Within a year or so, these current stimulatory policies will be gone, and Australia’s best-performed property markets will be the ones that always had the strongest fundamentals.”

While the current stimulus measures were in response to softer national economic data, when it is compared to the post-global financial crisis stimulus, it was valid, Mr Pressley said.

“The strong, and largely across-the-board, rebound in Australian real estate prices from the 2009–10 stimulus is likely to be repeated in 2020,” he said.

“However, the smart decision-makers of today will be looking beyond 2020 and trying to figure out which Australian property markets have the best potential post-stimulus.”

When the global financial crisis sugar wore off, all capital city property markets declined in 2011, and five of them also declined in 2012, he said.

“The markets which subsequently went on to become the best performers were ones which hadn’t seen much price growth during the pre-GFC years, their housing supply had been tightening throughout all of those lean years, and price growth then occurred through improved local economic conditions,” Mr Pressley said.

“Back then, the markets which had those key fundamentals included the likes of Sydney, Melbourne, Hobart, Orange, Byron, Geelong and Newcastle. This time around, it will be completely different property markets.”

There was nothing orderly about the current property markets, Mr Pressley said.

“Given the significant policy disruptions, I consider it to be a completely futile exercise to attempt to forecast actual rates of property price growth for 2020, and anyone who buys property based on the potential of a one-year result is in the wrong game anyway.”

The outlook for Australian real estate is as good as it has been for many years, he said.

Source: Realestatebusiness.com.au

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