According to CoreLogic’s national home value index, home values rise through December 2019, cap-ping off a solid ending to the real estate market for the calendar year. This minimal rebound in dwelling prices indicates home owners are becoming richer, which may also assist in paying for household expenses.
On the other hand, housing affordability is forecast to worsen even further as house prices surpass growth in household incomes, indicating an impediment for people who are saving for a deposit.
The deteriorating housing affordability is likely to slow down the activity across price-sensitive sectors of the market. This particularly true for Sydney, where housing prices are already pegged at 8.2 times greater than gross annual household incomes midway through 2019.
Regardless, an increase in investors who are drawn in by opportunities for capital gains and a positive spread between mortgage rates and rental yields should help counteract a decline in active from more price-sensitive buyers.
In addition, minor cities where housing prices are more reasonable and economic conditions appear recovering may provide certain protections for investors who will see advertised stock levels increase.
Jobs and population growth is weakening in NSW and Victoria, while the situation is picking up in Queensland, Western Australia and, to a lesser extent, South Australia.
Relatively low dwelling prices, combined with increased migration rates and recovering jobs growth, could prove beneficial for the capital cities in these regions.
With household values tipped to increase through 2020 across most regions, the year may result in a change in the growth dynamic, with bigger cities forecast to experience a slowdown in the fast pace of progress seen through the second half of 2019.
In contrast, minor capital cities like Perth and Brisbane, as well as major regional hubs and lifestyle markets like Newcastle are expected to enjoy improved conditions as buyers are drawn in by affordable prices combined with job opportunities and lifestyle factors.