Property Outlook January 2019

Headlines last year like “house prices set to plunge in 2019” may make the future of the property market seem grim, but before you hit the panic button, just how accurate were they?

The Property Report January 2019 from Nerida Conisbee, Chief Economist at realestate.com.au provides some interesting and considered commentary on what to expect this year.

You can read and listen to her full report, including a state by state overview, but I wanted to give you a rundown of the key points.

What’s happening to property prices across the country?
While we’re seeing a downturn in Sydney, Melbourne, Perth, Darwin and some regional areas, the realestate.com.au House Price Index shows the decline is not the worst-case scenario once thought. Even more positively, house prices continue to grow in Hobart, Canberra, Adelaide and Brisbane; and areas of regional Victoria and regional NSW are also showing very strong price increases.

So, what’s the outlook for 2019?
It’s expected that prices in Sydney and Melbourne will continue to fall for the first half of 2019. After that it will depend on two major factors – the outcome of the Royal Commission and the potential changes to taxation for property investors should Labor win next year’s federal election.

Royal Commission Report due 1 February
It’s anticipated that there’ll be no major changes to residential lending – if there are any at all – particularly given the restrictions already imposed by APRA last year. APRA has now removed the cap on interest-only loans, which could be a positive sign of things to come. But if the report does recommend more restrictions on lending, it would reduce borrower demand and, in all likelihood, cause further declines across the market.

The federal election.
If Labor forms government and makes good on its proposed changes to reduce tax concessions for investors, it will almost certainly negatively affect housing demand and property values despite assertions from various stakeholders that it won’t.

Best-case scenario
If we see lending restrictions ease and minimal changes to negative gearing and capital gains concessions, we should start to see more settled market conditions from the second half of 2019.

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