Housing markets around the world have been in difficult situations for some time now. China/US trade tensions were said to be primarily responsible for this.
Till June this year housing prices and rentals were consistently falling. Although Australian economy is considered to be stable still it suffered the same fate. The consensus was that Australia’s housing market had peaked. There was a substantial fall in new constructions as well.
As majority of bank loans in Australia are in residential properties they were rather worse off. This proportion seems to be highest in developed countries and more than double compared to the US. Credit was further squeezed by a nervous banking sector after the royal commission.
While many thought it to be the end for over indebted Australian mortgage holders some looked at it as a buying opportunity.
With successive rate cuts combined with loosening of credit restrictions slight turnaround could be seen across the sector.
Enquiry levels are improving gradually following the Federal election and interest rate cuts. Sales activity reflects improving market conditions. Prices look to be stabilised with NSW showing early signs of increases. Sales volumes is expected to increase further in FY20 from the current levels
The residential market cycle has improved, particularly in Sydney and Melbourne, and the southeast Queensland market is steadily improving. The Sydney market was particularly strong since September.
The Australian housing market may be experiencing fast recovery. The obvious question now is if it could be sustained with the same pace.
While current market conditions remain mixed, fundamentals are positive with steady employment growth, record low interest rates, recent tax cuts and high investment in infrastructure. Some uncertainty remains though, being driven by a number of factors including constrained credit availability, weak consumer sentiment and global trade conditions.
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