Melbourne house prices will rise for the rest of this year before soaring even higher next year, according to a major bank reporting a “sharp reversal” in homeowners’ fortunes.
NAB expects house prices to have increased 0.7 per cent by the end of 2019, before jumping a further 7.4 per cent in 2020, its latest Residential Property Survey shows.
Melbourne’s 2020 forecast is the equal highest in the nation, on par with Sydney, with NAB tipping the two major capitals to lead Australia out of the downturn that hit them the hardest.
House prices fell 9.1 per cent in Melbourne last year and 10 per cent in Sydney.
The bank’s previous two surveys, which are released quarterly, had forecast price falls of 8.8 per cent and 5.1 per cent for Melbourne this year.
NAB chief economist Alan Oster said the latest result marked “a sharp reversal” of those findings, in which “Victoria and New South Wales were expected to be the weakest states for price growth and the only states where prices were tipped to fall”.
“The results suggest the Australian housing market is on the way to recovery,” he said.
NAB has even higher hopes for Melbourne’s unit market this year, predicting a 4.2 per cent price rise, and then a 7.4 per cent boost in 2020.
Advantage Property Consulting director Frank Valentic said it had been “surprising” to see the Melbourne market change so quickly, from a buyer’s market during a downturn back into a seller’s market.
Mr Valentic attributed the rapid turnaround to May’s federal election result and interest rate cuts renewing buyer confidence, and the fact househunters had little to choose from with stock levels down “30-40 per cent on previous years”.
“It’s amazing how quickly that tap turned on after the election — I don’t think anyone could have picked that,” he said.
”But the tap also turned off that quickly in September 2017 (when the downturn started).”
He expected “very strong buyer demand” — reflected in auction clearance rates consistently landing above 70 per cent — to push property prices up for the rest of this year and next.
NAB’s survey of more than 300 property professionals also found housing market sentiment had “lifted sharply” in Victoria to become the highest in the nation “by some margin”.
Earlier this month, ANZ tipped Melbourne house prices to have risen 3 per cent by the end of the year, and 9 per cent by the end of next year.
And the Real Estate Institute of Victoria found median house sale prices increased in 65 Melbourne suburbs during the September quarter, with the citywide figure rebounding from five straight quarters of declines to record a 4.5 per cent jump to $830,000.