SQM Research’s Housing Boom and Bust Report for 2020 forecasts show that the majority of house prices for capital cities will increase in 2020. SQM Research Managing Director Louis Christopher says that Brisbane’s improved economic outlook would support the housing market with Brisbane’s home prices projected to rise by up to 7%.
The outlook is that residential investment property and home prices in Sydney will increase by 10-14% and prices in Melbourne will rise by 11-15%. But while home values are expected to rebound in Sydney and Melbourne, Christopher says he questions recovery sustainability in those “overvalued” markets.
Based on these four economic scenarios, the effect on the housing market was evaluated according to this SQM report. The first scenario is an unchanged cash rate of 0.75 percent, recovering the economy and AUD ranges from 0.65 to 0.75 percent in the US, no APRA intervention until the earliest late 2020.
The second scenario will bring the RBA down to 0.5% by April 2020, cautiously stabilized trade wars, stable economy, no intervention by APRA. However, a third scenario similar to the first scenario occurs in mid-2020. Fourth scenario breakdown of trade talks, deterioration of the economy, reduction of the RBA cash rate to zero by the end of 2020.
“Brisbane is offering better value for money for those who decide to move from Sydney to Melbourne,” he says Elsewhere, Hobart prices could rise by 8%, Canberra 7%, Adelaide 4%, and Perth 6%. Only Darwin will keep falling, as its economy continues to struggle. The forecasts are based on the assumption that the cash rate will remain on hold, that the economy will recover, and that APRA will not intervene until the end of 2020.