2019 is fast approaching – scary, right?! We know what you’re all thinking… “Where has the time gone?” Well, whether we like it or not, 2019 is nearly upon us.
And after a tumultuous 2018 in Australian property, some of you are likely wondering whether the market will turn a corner in 2019? Economists have shared their predictions in recent weeks, and we’ve provided a summary on some of what they had to say.
No sign of relief
We hate to be the bearers of bad news, but experts warn that there’s no sign of relief for Australian property owners, as house prices are set to continue to tumble well into next year.
In fact, Morgan Stanley has said that “Australia’s property downturn will be the longest and largest since the 1980s, with Australian home prices having fallen for 12 consecutive months, with the pace of price declines accelerating nationally in September.”
Prices should continue to drop in 2019
Now that the price falls are well and truly in motion, all five economists recently surveyed by The Australian Financial Review forecast that national house values will continue to drop in 2019, with Sydney, the epicentre of the downturn, dragging down the national average.
Stephen Koukoulas, of Market Economics, was most downbeat about the state of the property market, with expectations that prices would fall in Sydney between 7.5 and 10 per cent in 2019, after a drop of 7.5 per cent in 2018. Nationally, he predicted house prices would fall by between 5 and 7.5 per cent.
“From the 3rd quarter in 2019, I am forecasting some stability in prices as supply and demand forces underpin new activity.” Mr Koukoulas said. By then he expected cashed-up first-home buyers would be lining up to take advantage of increased levels of affordability.
The good news? The down cycle still has momentum and prices are expected to ease further as we progress into 2019. While it is slowing, population growth remains strong and will ensure ongoing demand for housing throughout the cycle.
Mortgage stress?
Banks and borrowers should adjust
Economists have advised that banks and potential borrowers should adjust to the “new normal” of stricter lending standards in 2019, resulting in mortgage lending starting to grow again (although at a slow pace). Why? Because this should see price falls bottom out, as well as lead to an improvement in market sentiment, which is an important driver of prices. Also supporting house prices, will be continued strong population growth, lower unemployment, a pick-up in wage growth and increasing first-home buyer activity due to improved affordability.
Dodging the debt
We believe that a credit crunch will be necessary to ensure customers can realistically afford their home loans, in order to avoid Australians getting into further debt that they simply cannot afford.
We’re happy to share that market analysts agree too, with the banking royal commission’s interim report raising the likelihood of such a borrower credit crunch.
Not surprisingly though, banks have argued it is too hard to conduct full checks on borrowers, but Commissioner Kenneth Hayne gave this short shrift in his report, saying it was “not difficult” to look at a customer’s income and spending on their bank statements – which are often held by the same bank they are seeking loans from.
Let’s hope the banks and credit providers get into the Christmas spirit this holiday season, and remember to do what’s best for us Australians, as we so deserve.
At Life After Debt ®, we don’t provide loans for your home – we provide debt advice, assess debt solution options to help you reduce your debt (without taking out a new loan), and discuss how to avoid bankruptcy by offering affordable, practical financial solutions, proven to relieve hardship. Even if you have bad credit and cannot get a loan, we can discuss debt options with you to avoid Bankruptcy and legal action. There really is Life After Debt ®!
Contact us to find out how we can help you become debt free and stress free today.