Melbourne house prices tipped to rise by up to 15 per cent: SQM Research
The quick turnaround in the housing market looks to be more prolonged than many forecast according to new research from SQM Research.
In the new 'Christopher's Housing Boom and Bust Report 2020', Melbourne house markets could climb up to 15 per cent.
The report offers four scenarios that could play out over 2020, with the base case the most likely.
Should the cash rate remain at 0.75 per cent and there be a recovery in the economy, as well as no intervention from APRA until late 2020, then house prices in Melbourne will return to the peaks of late 2017.
Sydney gains are likely to be slightly more modest, with gains forecast up to 14 per cent.
“The Sydney and Melbourne housing markets have recorded a sharp turnaround in the 2nd half of 2019 following on from the surprise result of the Federal Election, interest rate cuts, the loosening of credit restrictions and ongoing strong population growth rates," SQM Research boss Louis Christopher says.
"These factors are expected to drive the national housing market into 2020. In a close call, APRA is expected to not immediately intervene despite the strong price rises."
Christopher notes however he has some misgivings on the sustainability of the new recovery.
"Sydney and Melbourne are rising from an overvalued point. Long term, our two largest housing markets look vulnerable and forever reliant on cheap credit. Housing debt, while falling compared to GDP over 2019, is still very high.
"Better value can definitely found elsewhere such as Perth and Brisbane”, said Christopher.
Nationally SQM believe dwellings will rise between seven per cent and 11 per cent.
At the most unlikely end of the scale, scenario four, if rates were cut to 0 and quantitative easing begins, then house prices in Sydney and Melbourne could be flat, or see marginal gains.