Both Sydney and Melbourne have recorded positive gains in price growth for the first time since the market peak in 2017. Melbourne property values grew by 0.2 per cent and Sydney market grew by 0.1 per cent over the month of June.
The latest figures from CoreLogic’s Hedonic Home Value Index show the smallest monthly decline since March 2018 nationally, just a 0.2 per cent fall in June as lower mortgage rates and a more optimistic market sentiment helps the market to continue to recover.
“This is really a turning point for Sydney and Melbourne,” says Tim Lawless head of research for CoreLogic.
“I think we will see Sydney and Melbourne continue to see a mildly positive change through winter and probably into spring as well, but I don’t think we will see a material or rapid rebound in either of those markets, simply because we are seeing credit conditions are very tight and affordability constraints in those markets are still an impediment to buyers,” Mr Lawless added.
“We had seen the market improving before the election and the rate cut came through, so that was a case of an improvement to affordability but also we were seeing some early signs that credit was starting to stabilise, so I think that was very much an organic improvement prior to the federal election but since then it’s been very positive.”
Sydney House Prices Tipped To Grow 7 Per Cent By End of 2020
According to Domain Group’s latest property price forecast, the residential property market is expected to start to recover in the second half of this year with house prices in Sydney to grow 2 per cent by Christmas followed by up to 5 per cent growth in 2020.
Canberra is forecast to recover even further with expected growth of 2 per cent in the next six months, followed by another 4 to 6 per cent across 2020.
The Melbourne forecast is not so positive with a modest price growth forecast of a 1 per cent increase over the second half of 2019 and another 1 to 3 per cent in 2020.
This positive outlook is based on a number of factors including the Coalition’s win, more interest rates cuts from the Reserve Bank (July and November) and proposed changes to APRA’s mortgage serviceability test going ahead.