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2019 was a year of two halves. The first half pre-election of decline, and the second half post-election, which saw one of the fastest turnarounds in Australian property history.

Price rises were boosted by falling interest rates and looser lender on the back of decreased APRA restrictions.

Experts predict price rises to increase into 2020, notably in Melbourne and Sydney where rises have been among the fastest in the country.

Real Estate agents are seeing buyers confident that they aren’t over-paying, even with quick-rising prices.

First Home Buyer Scheme.

More first home buyers are expected to flood into the market in 2020 with the introduction of the First Home Loan Deposit Scheme.

Under the scheme, first home buyers will be able to get a foot in the property market with a deposit as little as 5% and avoid Lender’s Mortgage Insurance.

Prior to the scheme buyers armed with such a small percentage deposit were hit with LMI which could be in the tens of thousands of dollars.

However, the scheme is limited to 10,000 home loans per year. With over 100,000 loans granted to first home buyers each year, the impact of the scheme on house prices is uncertain at this point in time.

Interest rates

The major banks are expecting another reduction in the cash rate early this year. This after the RBA considered a cut back in November last year.

November’s decision to put a hold on rates last November were predicated on already record-low rates impacting upon Australian’s savings and confidence in the economy.

CoreLogic is predicting further price increases in 2020, at a steadier pace than the 2019 whirlwind post-election.

Mass Media have heavily focused on property results and auction clearance rates and these are important numbers. These numbers show the result of the climate of low interest rates and looser lending, with the banking royal commission now behind us.

2019 Review

  • 21 months of decline ended in June 2019, with prices falling 10.2% over this prolonged period.
  • The most lengthy decline was followed by a speedy recovery with Sydney and Melbourne prices now 9.5% higher since finding the floor in May.
  • The RBA cut interest rates to 0.75%
  • Year ultimately ended in positive growth on property prices.

2020 Outlook

Lenders are still maintaining a conservative approach to lending. The scrutinizing of borrowers spending habits, notably Netflix and UberEats habits gained wide spread attention in 2019.

The scrutiny came as lenders sought to understand each individuals spending habits to ascertain whether they can afford repayments. Previously borrowers used the household expenditure measure (HEM) to quantify a borrowers spending.

With prices increasing so quickly, concern is being raised that affordability could become an issue.

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