The property outlook for 2019: Expert predictions

There’s been a lot of talk recently about how the housing market in Australia is going to look over 2019. It’s certainly a period of change in the Australian property market, so we’ve rounded up the views and comments by some of Australia’s foremost property predictors:


CoreLogic’s latest home value index showed that Australia is currently experiencing the weakest conditions in a decade, on the back of falling property prices across the country with December 2018 ending in a 4.8% fall. This has been particularly apparent in the Sydney and Melbourne markets, where the last month of 2018 resulted in values declining by 1.8% and 1.5% respectively, compared to 1.4% and 1% in November. Across the rest of the country, the weaker marker was compounded by falls of 1.8% in Darwin, 1% in Perth, and 0.2% in Brisbane. As CoreLogic’s head of research, Tim Lawless, said, “If you look at quarter on quarter numbers the declines have accelerated throughout 2018 — values are down nearly 4% over the quarter [in Sydney] … it’s really being compounded by less owner-occupier activity and more inventory — listing numbers in Sydney are up about 20% on a year ago.” It’s worth noting that Sydney values are now 11.1% lower compared to the July 2017 peak, and Melbourne is down 7.2% on November 2017. Regional areas around Melbourne haven’t fared nearly as badly, with Gippsland growing 8.7% over the year, and Ballarat increasing by 8.3%. Sydney’s regional areas didn’t show this strength, and Mr Lawless noted that “Regional markets are really seeing a change of guard at the moment — we’ve seen strong markets adjacent to Sydney but that trend has really reversed.” However, there is good news from CoreLogic: Mr Lawless said that whilst he expected further price falls in 2019, the anticipated that they would also stabilise. “Absolutely we will continue to see values falling in Sydney but it will be surprising if we see an acceleration of decline [in 2019],” Mr Lawless said.

Reserve Bank of Australia (RBA) and Australian Prudential Regulation Authority (APRA)

The Reserve Bank of Australia’s lending figures highlight that property investors continued to retreat throughout the latter end of 2018. Mortgage borrowing by investors grew only 1.1%, which is the slowest annual pace on record. December heralded change as banking regulator APRA removed its investor lending caps, however major banks have now imposed stricter lending standards for borrowers. This is on the back of the 2018 Royal Commission into the ‘Big Four’, and experts have anticipated that the removal will, therefore, have little effect on the market in this environment.

AMP Capital

AMP Captial’s chief economist, Shane Oliver, remarked that given the falls by the Sydney and Melbourne markets, those two markets will fall another 10% or so. He further stated that he expected these falls to be related to factors including less foreign demand, and uncertainty on property tax policies. He also made a point to remind everyone that it is an election year, which will add to uncertainty. Mr Oliver continued on to say that it’s likely that the RBA will be looking to boost consumer spending and fend off any weaknesses in inflation. The official cash rate was expected to be 1% in December last year, but ended up holding at 1.5% — as it has done since August 2016 – a record 29-month hold of the cash rate. The next RBA meeting is scheduled for the 5th of February, 2019.

Commonwealth Bank of Australia (CBA)

Good news: the CBA believes that the Australian property market won’t crash. Bad news: three of the four big banks have just raised mortgage rates, and CBA economist Gareth Aird says that rates “are more likely to go up rather than down” over the next year. Credit growth to housing investors has fallen to an all-time low. Auction clearance rates have steadied at a lower base, but overall listings remain elevated — especially in Sydney and Melbourne. And in Westpac’s latest consumer survey, the number of respondents who said they expect house prices to rise over the next year fell to the lowest level since the question was first asked in 2009. CBA’s base case is that Sydney home prices will decline by 5% annually in 2018 — a relatively mild assessment given the latest weekly data from CoreLogic Sydney house prices are currently 5.9% lower than this time last year.

What’s the takeaway?

Overall, the consensus is on the Australian housing market showing a downturn this year, and how this will affect Brisbane and the South-East Queensland property market is not yet clear. However, as the reports of 2018 showed, Brisbane is far outperforming both Sydney and Melbourne and will continue to do so in the coming months.

Written: 20 January 2019, Updated: 6 April 2020