House prices could grow 5-10%

By Gerv Tacadena | 13 Sep 2019

Economists at UBS have lifted their price expectations for Australia's housing market — from a muted recovery between 3% and 5%, their fresh projections are pointing to as much 10% increase by next year.

The revision was due to the sharp lending growth witnessed in July. Figures from the Australian Bureau of Statistics show that investor lending grew by 4.7% to $4.6bn, its fastest pace since September 2016.  Owner-occupier loans also recorded substantial gains at 5.3% to $13.25bn.

The overall value of financing commitments jumped by 5.1% in July, driven by the substantial growth in new lending.

"We expect home loans to lift to 15% to 20% year-on-year over the next year, underpinning stronger house price growth of 5% to 10%," UBS economist George Tharenou said. 

Also read: Where Are Property Prices Growing Australia-Wide?

However, Tharenou said the growth in prices could pose a change in the outlook for the official cash rate, which is expected to go down further by next month.

"For now, the onus is on unemployment and global central bank easing to get the RBA over the line to cut. That said, regulators should stand ready to use macro-prudential tightening and consider further measures in the future should circumstances change," he said.

Tharenou said it is highly likely that the central bank will slash rates and tighten credit rules at the same time to prevent another house price boom from happening and cushion the impact of record-low household income.

Market reaching its bottom
The decline in property prices continued during the June quarter, according to data from the Real Estate Institute of Australia.

The average median price for houses decreased by 1%, while the average median value of units declined by 0.6%.

Despite the continued slump in prices, REIA president Adrian Kelly said the rate of decline appears to be already slowing.

"With the post-election boost in confidence in the real estate market as evidenced by higher levels of enquiry, two cuts in interest rates and changes in APRA's requirements, the June quarter will most likely mark the bottom of the cycle," he said.

Top Suburbs : stafford hts , thebarton , mt gravatt , midland , alexandria


Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local mortgage broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here