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Australian house prices on the rise after largest downturn on record

Recent interest rate cuts, an easing of home loan lending restrictions and slashed income taxes are helping Australia’s real estate market rebound after one of the worst downturns in history. Experts say property prices are rising more rapidly than expected and predict national house values to grow upwards of 4.5% in 2020.

The nation’s median house price dropped 8.4% between July 2017 and May 2019. With only a handful of larger price dips during the late 1800s, the slump surpassed the recession of the 1990s and 2008 financial crisis, making it the worst ever recorded in recent decades.

Prestige markets in Sydney and Melbourne were hit the hardest during the downturn, which lasted from mid-2017 until earlier this year, with an average price drop of 22.5% in Sydney and 32.1% in Melbourne, according to Core Logic data.

REA Group’s chief economist, Nerida Conisbee, said these expensive pockets saw the biggest declines because they needed the biggest price corrections. “Before the downturn, prices overshot, and the subsequent decline was the market coming back to a more sustainable level. This meant the correction was a little more aggressive,” she said.

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