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What lies ahead for housing prices in 2020?

If you want to know what lies ahead, start by looking at the clues behind you.

Almost anyone who owns real estate would give their second garage to know what will happen to prices in the future.

Will they go up and, if so, by how much? Where will this happen, and when? What is the house and unit price outlook across Australia in 2020?

To give our crystal ball a solid foundation, we asked CoreLogic RP Data for a statistical snapshot of prices and sales in all capital cities in February 2010. We also asked for comparative sale numbers and median sale prices from February 2015.

Hopefully, this five-year snapshot will reveal trends that help us forecast what lies ahead for Australia’s capital city housing markets.

So here’s the low-down:

salescomp1

salescomp2

What does the data all mean?

According to Cameron Kusher, CoreLogic RP Data’s Senior Research Analyst, “the standout message” is that Sydney, and to a lesser degree Melbourne, has been the star performer over the past five years.

“All the others (capital cities) have been fairly muted,” Kusher says.

“One question people often ask is ‘why haven’t all the markets grown equally when recent interest rates cuts are national’?

“Well the reason we have seen such strong growth in Sydney and not in other markets is more because of overseas migration to Sydney, which has been fairly strong because of its job opportunities, because New South Wales’s migration away has been low since 2010 and also because there’s a shortfall in housing.

“It is these factors that have all contributed to its price rises, whereas Brisbane and Perth both experienced losses, in South Australia, the Olympic Dam extension didn’t go ahead and that impacted Adelaide’s market, Hobart has been weak economically for the past decade and Darwin and Canberra are both strongly tied to government spending, which has been largely curbed in recent years.

“The takeaway message is Australia’s property market is far from a one-size-fits-all.”

What housing trends do the experts see in the next 5 years?

While interest rates stay historically low, Sydney and Melbourne’s house prices will continue to grow, Kusher says.

“It is hard to see that happening as strongly as it has this past five years but as long as the fundamentals remain, there will be growth. As interest rates start to rise, we will see this growth tapering.”

Investor Nathan Birch, Co-Founder of Binvested, agrees there’ll be “a couple more years of solid growth” in Sydney.

“Maybe not quite the double-digit growth we’ve seen in the previous few years, as there is still a shortage of supply and a strong confidence level based around the historically low interest rates,” Birch says.

“Many experts are tipping that we should see some good growth over the next five years if you buy in the right areas and invest wisely,” Miraglia says.

“Record low interest rates have tempted many investors to get back into the market and more potential first home buyers are looking to get into the market.

“This alone should see median house prices move up over the next five years but also throw into the mix the Chinese who are looking to invest abroad and we should see some good growth of around 5% per annum.”

But there’s also some likely upswing ahead for Hobart and Brisbane, predicts Kusher.

“You will probably start to see some growth in these cities, particularly as Sydney and Melbourne prices push higher and some homeowners decide to sell up and retire to cities with lower price points.

“Brisbane may start to grow, given its government has just changed and all the former government’s public job cuts are over.

“Adelaide will be impacted by the car industry closing down in coming years – that will have some impact on home prices – Perth has been impacted by the fall in commodities and this will continue for some time and Canberra could go either way, particularly if we do see a change in government between now and 2020.”

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