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CoreLogic head of research Tim Lawless has released his 2019 year in review report (The Year that Was), highlighting that this year saw both record lows and highs.
“In 2019 we saw the housing market move through the largest and longest correction on record, followed by a fast-paced rebound in values through the second half of the year,” Mr Lawless said.
“Housing turnover fell to record lows in 2019, as did new advertised stock levels. Interest rates reduced to levels previously unseen, while the concentration of investors in the market also plumbed new depths.”
According to CoreLogic data, the “longest and largest” correction in Australian housing values on record finally reached its floor in June 2019.
Between the market peak in October 2017 and its trough in June 2019, the national index fell by 8.4 per cent.
The largest peak-to-trough falls were recorded in Sydney (down 14.9 per cent) and Melbourne (down 11.1 per cent).
Tim Lawless said the main contributing factors to the rebounded housing market include the surprise results of the federal election in May, which eased the uncertainty around property tax reform, as well as changes to loan serviceability assessments introduced by APRA.
Additionally, 2019 saw three cuts made to the official cash rate in June, July and October, which brought interest rates to record-low levels, also contributing to rebounded housing prices.
According to CoreLogic, 2019 also saw record-low levels of turnover in the housing market, reaching just 4 per cent in the spring of 2019, compared with the decade average of 5.3 per cent.
Turnover was the lowest in the Northern Territory, at 3.3 per cent, followed closely by Western Australia at 3.4 per cent, Victoria at 3.9 per cent, and NSW at 4.0 per cent.
Tasmania, where the housing market has held generally strong, showed the highest turnover rate at 5.1 per cent.
Mr Lawless highlighted that persistently low consumer sentiment, high transactional costs, and overall low inventory levels has contributed to low sales activity despite the lift in buyer demand.
In fact, new listings numbers have been consistently tracking at record lows throughout 2019, according to CoreLogic, and even during the spring listing season, new stock remained seasonally low.
Increasing buyer demand and persistently low levels of listings have also contributed to upwards pressure on housing prices.
Further, 2019 saw the lowest level of investor participation in the market on record, with investors comprising of only 24.8 per cent of mortgage demand in the year.
While investment lending increased following the federal election results in May, owner-occupier lending increased even more, pushing the proportion of investor lending lower.
With lowers levels of investor participation, this year saw a surge in first home buyers (FHBs), taking advantage of subdued house prices and less competition from investors in the earlier months of the year.
FHBs comprised of almost 30 per cent of owner-occupier mortgage demand in September, up from 20 per cent four years ago. However, levels of FHB participation are likely to slow as property values continue to increase and investors return to the market.
Mr Lawless shared a summary of his predictions for the year to come in 2020.
“For 2020, we’re likely to see markets in recovery mode as housing prices catch up and then overtake their previous record highs; however, we expect the rapid rate of capital gains seen over the second half of 2019 to lose steam as stock levels rise and affordability deteriorates.”
[Related: Major banks maintain share of new loans]
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