One of the world’s biggest banks, HSBC Holdings Plc has more than doubled its forecast for Australian property price increases next year following a rebound in 2019, according to Bloomberg.
HSBC now predicts nationwide prices to rise by between five to nine per cent, up from zero to four.
Sydney and Melbourne have led the charge in the market’s dramatic rebound, and it’s largely expected this will continue in 2020. The worldwide bank is now forecasting gains of between eight and 12 per cent in Sydney and 10 to 14 in Melbourne next year.
This marked turnaround, where just six months ago the discussion was how much prices would fall, has largely been down to three separate interest cuts by the Reserve Bank of Australia in a bid to kickstart the economy.
In addition to mortgage rates at record lows, the housing market rebound is being driven by a loosening of regulations on lending, the re-election of a housing investment-friendly government and a shortage of supply of established homes.
The housing market is certainly reaping the benefits, with buyer confidence going from strength to strength.
“Oh, how the story has changed,” Paul Bloxham, HSBC’s chief Australia and New Zealand economist said.
“The speed of this change has seen a sharp rise in housing demand (buyers), without much of a rise in established housing market supply (sellers) as yet. As a result, housing prices are rising strongly.”
It’s not just HSBC revising their forecasts, with The Commonwealth Bank of Australia following suit in its latest Household Spending Intentions (HIS) report.
The study dissects what everyday Australians are thinking of doing with their money — and home buying spending intentions are up dramatically compared to six months ago.
The intention to buy a home is now back at pre-correction levels witnessed back in July 2017, meaning demand could reach frenzied levels once again.