Sydney and Melbourne house values to rise over seven percent in 2020: NAB
There seems to be no stopping the housing markets in Sydney and Melbourne, with strong growth forecasts for 2020 emerging off the back of the near two year downturn.
NAB have forecast house values in the two major capital city markets to rise 7.4 per cent in 2020.
"We have revised up our expectations for residential property prices," NAB chief economist Alan Oster advised.
"Prices have risen relatively sharply over the past 3 months after bottoming in April - led by gains in Sydney and Melbourne.
"Overall, we now expect the CoreLogic 8-Capital City house price index to be down around -0.6% in 2019, but to return to positive reads in Melbourne and Sydney.
"We expect prices to continue to rise at a moderate pace in 2020, lifting by 4.5% over the year.
NAB said they changed their forecast given the "significant adjustment" in prices on the east coast since mid-2017 after 15 per cent and 11 per cent peak to trough declines in Melbourne and Sydney.
"Despite these declines being relatively large, the adjustment appears to have occurred in an orderly manner following earlier prudential tightening and waning of domestic and foreign investor demand," NAB said.
"These adjustments also followed a period of exceptional growth, with Sydney prices having increased by over 70% in the 5 years prior to the downturn, while Melbourne prices were up over 50%."
NAB believe market activity will remain weak despite the stabilisation in prices.
"Dwelling investment is expected to decline relatively sharply over the next few quarters - though from a high base.
"While the pipeline of work to be done remains high, it is likely this will be quickly eroded with high rates of work done.
"Building approvals have continued to trend down, suggesting little replenishment to the flow of new work."
The NAB Residential Property Index has moved back into positive territory for the first time since mid-2018, reflecting the uptick in market activity in recent months.
NAB has forecast stronger growth in Melbourne apartments in 2020 compared to Sydney.