2019 Property Wrap Up - the good the bad & the funny!
Banking Royal Commission – arguably the most monumental event to rock the residential property market in 2019. With the introduction of the 30% cap on new interest-only loans (which has now been lifted) we saw a significant drop in investors in the market and a drop in the amounts being loaned. From banking royal commissions to creative marketing approaches – we saw a Sydney based real estate agency produce a very colourful property showcase that went viral with over 1 million views on YouTube. If you haven’t already seen this, turn the volume up and enjoy. The election came next – and we all breathed a sigh of relief as Scott Morrison took office. We saw an almost immediate turnaround in market sentiment. In May, we saw a glimmer of hope for lending, as APRA removed the 7 per cent serviceability allowing lenders to set their own minimum interest rate floor for use in serviceability assessments. Australia's most expensive apartment sold for $140m in October, Lend Lease secured a buyer for the top 3 floors in their One Sydney Harbour project. The owner occupier secured the penthouse and sub-penthouse to enjoy with their family. Cash flow positive returns: Apart from Sydney and Melbourne, as prices are expensive, all major capital cities, residential apartments are now offering gross rental yields that are higher than record low lending rates, resulting in cash flow positive returns. There’s no better time to invest. So what can we expect from 2020? According to SQM Research, Most of Australia’s capital cities will benefit from the interest rate cuts and loosening of credit restrictions to record dwelling price rises over 2020 with Sydney and Melbourne leading the charge.The base case forecast is for dwelling prices to rise between 7% to 11%, which is a strong bounce back from the price falls recorded over 2018 and the first half of 2019.
This rapid recovery and the introduction of the upcoming First Home Loan Deposit Scheme in January 2020 will likely contract housing affordability further in 2020. We’re also expecting a rush of first home buyers seeking to take advantage of the government scheme come January.