2020 is shaping up as a bumper year to tick off your property wish list, with property values trending up and interest rates likely to stay down.
Let’s take a look at what’s in store for 2020, so you can kick start some New Year plans.
The property market – values set to rise
According to QBE’s latest Australian Housing Outlook 2019-2022 report, we’re likely to see healthy house price growth across all the state capitals over the next three years.
Brisbane is shaping up as a hot spot to watch, with affordability and population growth forecast to drive house values up by 20.3% by 2022.
Adelaide is expected to shine with predictions of 12.7% property price growth. That’s followed by Darwin up 7.0% and Canberra (up 6.4%).
Regional markets also offer hot spots of growth. Top picks include Newcastle, to the north of Sydney, where house price gains of 10.7% by 2020 are forecast. Queensland’s Gold Coast region is expected to see house prices tick up by 8.8%. And Victoria’s inland city of Ballarat is predicted to notch up gains of 7.6% by 2020.
Tight supply should push values up
A key factor supporting rising property values is a squeeze on the supply of new homes. Since September 2018, residential construction has declined by 9%. Building approvals are 40% below their 2017 peak.
On top of this, the number of homes listed for sale across Aussie capital cities is 10% lower than a year ago. As the Reserve Bank points out, tighter supply will help home values forge ahead.
First home buyers – pick your strategy
The New Year offers plenty of opportunities for first home buyers, who can take advantage of improved affordability and record low interest rates.
Not surprisingly, three out of four first home owners say they believe now is a great time to get into the market, and three out of five first home buyers aren’t waiting to save a 20% deposit to buy their first home.
Three in four plan to apply for the Federal Government’s new ‘First Home Loan Deposit Scheme’; one in four will ask a family member to lend a hand, and 16% intend to use lenders mortgage insurance to bridge the deposit gap.
With so many options available, go straight to Aussie to find out how you could turn the key to a home of your own sooner.
Investors – yields are on the rise
If you’ve got plans to buy a rental property in 2020, the signs are positive. Rental yields are looking increasingly attractive, especially when you consider that properties can also deliver capital gains.
What’s really exciting for investors is that rental yields are averaging 4% nationally – that’s above the average 3-year fixed rate for investors of 3.8%, which is a real plus for cash flow. Add in improved prospects for capital gains, we could see a lot more Aussies invest in property in 2020.
What about interest rates?
Interest rates are already at record lows, and some economists are tipping rates could stay that way for quite some time.
Lower rates provide a golden opportunity for Aussies to potentially pocket savings on their home loan. Reserve Bank figures show the average standard variable rate is 4.94%. But you could potentially do much better with plenty of lenders offering home loans below 3%.
The good news is that the launch of open banking in 2020 should make it even easier to switch to a better deal on your home loan.
Open banking involves giving your bank permission to transfer your banking data to other banks or lenders, and it’s expected to streamline the process of switching to a home loan offering better value.
With just weeks to go to the New Year, go straight to Aussie to find out the steps you can take to start achieving your property goals in 2020.
You may also be interested in: James Symond’s Quarterly Market Outlook and Confused about the mortgage process? Stop taking advice from faux-perts!