Sydney and Melbourne Property Markets Are Set to Boom Once Again

House prices in both Melbourne and Sydney will be increasing by 12% per annum by mid 2020, according to a recent report by ANZ economists.

Both cities have been consistently named among the top five least affordable property markets in the world, and with more price increases on the way, the situation may only worsen for those who haven’t bought yet.

SYDNEY AND MELBOURNE’S NEW PROPRTY BOOM

During the last boom, from 2012 to 2017, Sydney’s average dwelling price increased by 75%, while Melbourne’s increased by 58%. In 2017 the market turned a corner and prices in Sydney and Melbourne dropped by 15% and 11%, respectively.

Then, in June this year, the downturn ended and prices in both cities began increasing again. The increases have been gradual but they appear to be picking up pace – during November prices in Sydney increased by 1.8%, while Melbourne’s increased by 2.4%.

If price growth continues at the current rate, Melbourne’s market could reach a new record high by early 2020, with Sydney’s market just a few months behind.

PREDICTIONS FOR THE FUTURE

Most signs suggest that price increases are on their way in both Sydney and Melbourne. Homes in both cities are selling faster than they were last year, which indicates that demand has increased relative to supply.

In the meantime, the construction industry is slowing down, according to RBA Deputy Governor Guy Debelle:

“Since September 2018, residential construction activity has declined by 9 per cent. The decline has been broad-based across detached and higher-density housing, as well as spending on renovations.”

This means that housing supply will increase at a lower rate, which could put more upward pressure on prices. In the meantime, interest rates are at record lows and many experts are predicting they’ll go lower, with another rate cut expected from the RBA this December.

Despite all those signs, most predictions are not as outlandish as ANZ’s. Westpac, for one, recently forecasted 6% price rises for both Sydney and Melbourne in 2020, while QBE is expecting a 5% total rise from 2020 to 2023.

Whatever happens, it’s clear that the downturn is over and Sydney and Melbourne’s property markets are on an upward trajectory. That’s why if you’ve been considering investing in property, right now could be the perfect time.