2020 Property Forecast

2019 was a large year for the real estate world, according to our Williams Landing real estate agents. Housing prices actually decreased, giving first home buyers a chance to buy into the market. Things like the Reserve Bank’s interest rate cuts last year from 1.5% to 1.25% also had a big impact on the housing market as it meant that banks were more inclined to borrow. But what does this all mean for 2020 – the start of the new decade? Join our Williams Landing real estate agents as they forecast the upcoming year.

Are prices going to go up?

Whilst the middle two quarters of last year saw property prices fall by up to 10% in Melbourne, the final quarter saw that drop regain its former value quite quickly. In fact, 2019’s fourth quarter saw the fastest property value growth in over a decade. So, 2019 actually ended on a high for property prices.

It’s most likely that prices will continue to rise this year and then begin to slow down in the latter half of the year. This could mean that we’ll be seeing some more records being set for high prices. ANZ’s Senior Economist, Felicity Emmet, has predicted that there will be a 4.3% growth in the property market for Melbourne this year.

What’s going on with interest rates?

Last year, the Reserve Bank of Australia cut interest rates to 1.25%. It is predicted that the next cut could come as early as February 2020 – making it even more attractive for banks to borrow from the RBA. This interest rate is not to be confused with the rate your bank gives you for home loans, however.

What is the RBA?

The Reserve Bank of Australia is Australia’s central bank and is the authority that issues money. When we talk about the RBA cutting interest rates (or cash rates) it means the rates that apply to the banks that borrow money overnight. Even though this rate does not apply specifically to you or your home loan – it can still affect you.

If the RBA interest rate is low, it means that banks are more likely to borrow money. This means that they could be more likely to lend money to businesses and home buyers as they know they won’t have much interest to pay on it themselves. It’s a cause and effect situation where one action influences another – even if it’s not directly.

What does this mean for first home buyers?

Even though prices are going to continue to rise, it’s not all bad news for first home buyers. The RBA interest rate cuts could mean more leniency when it comes to banks lending money to people like first home buyers – increasing their chances of getting a loan at all. The other bit of good news comes in the form of the First Home Loan Deposit Scheme.

What is the First Home Loan Deposit Scheme?

The First Home Loan Deposit Scheme is a new initiative that came into effect on the 1st of January, 2020. This scheme aims to make it easier for first home buyers to purchase properties by increasing their chance of a loan. The standard deposit for a house is 20%. However, if you’re a first home buyer then you can apply for a home loan with anywhere between 5% – 20% of a deposit.

If you wanted to do something similar prior to this scheme coming into effect, then you would’ve had to apply for Lender’s Mortgage Insurance (which protects the lender in case you miss any repayments). Now, an LMI is unnecessary if you’re eligible for the FHLDS. Not everyone will be eligible and there are several requirements that you must meet to be eligible. For the eligible buyers, however, it could be a huge help in getting them on the Williams Landing real estate map.

Looking for Williams Landing real estate this year?

Though prices are set to increase this year, it’s not all bad news with further expected RBA interest rate cuts and the First Home Loan Deposit Scheme coming into effect. With the new decade comes new opportunities, and, Red23 Real Estate can help you recognise those opportunities.

Our die-hard Williams Landing real estate agents can help you buy, sell or even rent a property that will suit your needs. Get in touch with our agency today to see what we can do for you by calling 03 8372 2122. You can also contact us via the enquiry form on our website.