What to expect in the new financial year
The 2019 financial year (FY19) was an eventful 12-month period for property markets around the country. Royal commissions, elections, interest rates and global economic events all had an influence on real estate owners and buyers over the course of the year. Positively, now these events have concluded, looking forward to FY20 there are signs of a rebound in confidence for property buyers, and markets are expected to benefit from this.
What to expect in FY20
Recent indicators point to a more optimistic outlook for real estate markets over the coming 12-months. It appears that the cessation of property tax policy uncertainty has led to an uptick in certainty and confidence from property buyers, particularly investors. This has been evident in a higher number of enquiries and open home attendances which has also resulted in stronger auction clearance rates.
We expect upgraders, first home buyers and investors to continue to pick up momentum over the year as mortgage rates become cheaper and listings rise in line with the traditional spring selling period.
One of the key drivers of higher market activity over FY20 will be interest rates. The RBA cut the official cash rate by 25 basis points in June and July to a record low of 1.00%.
The positive thing for mortgage holders is that the majority of banks and lenders have followed the RBA’s lead and reduced their rates. This will in turn increase mortgage affordability and will assist households looking to borrow more to upsize or renovate, or for first home buyers getting into the market.
The re-election of a Coalition federal government ensures that there will be no future changes to negative gearing and capital gain tax concessions applied to property. This now provides certainty and confidence for investors about how they structure their purchases. This increased confidence has already led to higher levels of investor interest and is set to push higher as banks get more comfortable with the new normal in terms of regulation and lending practices.
First home buyers
Many first home buyers have been sitting on the side lines, saving for a deposit, over recent years waiting for the right time to jump into the market. Interest rates at record lows, recent property price declines and a new federal government deposit scheme will ensure that first home buyers ramp up activity over FY20 to take advantage of the current market environment.
The current environment for those considering selling to upsize or downsize, is now highly positive. A number of banks are offering mortgage rates below 3.00% and post-election confidence from buyers has risen; however, listing numbers are yet to rise in line with the recent pickup in enquiry. This creates a captive market for savvy home owners looking to achieve a solid price for their home before the traditional spring selling period.