Moody’s Forecast – Sydney to be a TOP Performer!

November 20, 2019 |
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The Sydney property market will be Australia’s top performing housing market in 2020 according to Moody Analytics.  Their analysts expect Sydney house prices to jump 7.7 per cent in 2020 and a further 7.6 per cent by 2021.

Corelogic and Moody’s 2019 third quarter housing forecast report has predicted a significant uptick across the east coast capital city residential markets next year, after suffering the largest downturn in 40 years.

Sydney has recorded its quickest turnaround in decades, with house prices regaining almost one-third of the value lost during the two-year downturn. Apartment values began to see an increase as early as June, followed by house values in July.

Sydney house prices could increase by close to 8% next year, meaning they will make up much of the ground they lost during the downturn over the next year or two.  As always, the markets will be fragmented with different segments performing differently.   See table below:

 

Moody’s Analytics economist Karina Ell says that “our long-held baseline forecast—that the trough in the national housing market has occurred—is evident in improving activity in the Sydney and Melbourne markets, where 60 per cent of activity takes place.”

She reports that the housing market has also been “particularly responsive” to RBA’s rate cuts, which have been closely reflected in the lending rates, attributing much of the “strength in house prices and construction during the most recent boom was thanks to the decline in interest rates.”

“The RBA has reduced the cash rate by 75 basis points so far this year [with] a further 25-basis point reduction expected for early 2020.  This could trigger a pickup in the Sydney housing market that is more aggressive than forecast [and] would likely lead to further household leveraging.”

Source: Moody’s Analytics

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