Sydney and Melbourne values rose for the first time since 2017.
The property market predictions for July 2019 carried a cautious optimism that had been absent from the market for years. After the largest price decline in three decades, dwelling values in Sydney and Melbourne rose for the first time since 2017. Multiple data sources and expert reports pointed to a turning point in the Australian property market.
For buyers who had been sitting on the sidelines, the question was no longer whether the market had bottomed out. It was whether the recovery had legs and how quickly it might gather pace.
Signs of recovery
CoreLogic’s June 2019 data recorded a 0.1% rise in Sydney dwelling values and 0.2% in Melbourne. These were small gains, but they ended a long streak of monthly falls that had stretched back to mid-2017.
Auction clearance rates backed up the data. Capital city markets reached a preliminary clearance rate of 70.6% in July 2019, the highest in more than a year. Sydney led with 81.5% across 303 auctions, followed by Melbourne at 70% and Canberra at 60%. High clearance rates signal that buyers are active and willing to compete.
Property sentiment had clearly shifted. Analysts described the mood as moving from persistent negativity to cautious optimism, driven by a combination of rate cuts, eased lending rules and election-related policy certainty. For context on how a stabilising property market affects first home buyers, the dynamics were particularly interesting in mid-2019.
What experts predicted
BIS Oxford Economics released their Residential Property Prospects 2019 to 2022 report with city-by-city forecasts. Over the following three years, Brisbane was tipped to lead with 20% growth. Adelaide was forecast at 11%, Canberra at 10%, Darwin, Melbourne and Perth at 7%, Sydney at 6% and Hobart at 4%.
The report flagged affordability, easing credit conditions and lower interest rates as the main growth drivers. The RBA noted that conditions in Sydney and Melbourne had improved since their previous meeting, with housing prices stabilising in June and auction clearance rates picking up. RBA researchers also estimated that a one percentage point drop in the long-term real mortgage rate could boost housing prices by 28% in the long run.
ANZ’s research arm forecast housing growth of 3% in 2020, attributing the improving sentiment to the RBA’s back-to-back rate cuts, APRA’s eased loan assessment rules and election results that removed uncertainty around negative gearing and capital gains tax policy.
NAB confidence index
NAB surveyed 350 property industry participants for their Q2 2019 Residential Property Survey. The results showed confidence turning positive in New South Wales for the first time since early 2018. Western Australia recorded the biggest jump in confidence at +48 points, followed by Queensland at +42 points.
The overall market confidence index was expected to climb to +45 points over the next two years, up sharply from prior forecasts. NAB also highlighted a rebound in foreign buyer activity. After declining through 2018 and early 2019, foreign buyer market share in new property rose to 7.1% in Q2 2019, led by a sharp jump in Victoria.
NAB’s conclusion was that prices would stabilise in the near term, revising earlier expectations of further falls of around 5% in Sydney and Melbourne. The mood across the industry had clearly turned.
Borrowing power boost
One of the most significant shifts for buyers in mid-2019 was the increase in borrowing power. When APRA allowed lenders to set their own assessment rates rather than applying a standard 7.25% floor, buyers saw an immediate benefit.
First home buyers saw borrowing capacity rise by an estimated 15%. For investors, the increase ranged from 15% to 30%, depending on individual circumstances. Combined with the RBA’s back-to-back rate cuts in June and July, this created the most accessible lending environment in years.
For buyers who had been pre-approved earlier in the year, it was worth speaking to a broker again. Many found their borrowing capacity had improved. Anecdotal reports from agents also suggested a significant volume of stock was expected to hit the market in spring, meaning pre-approval would give buyers a competitive edge.
Is now the time to buy?
With confidence returning and lending conditions at their most accessible in years, mid-2019 presented an interesting window for prospective buyers. Values had fallen far enough from the 2017 peak to improve affordability, but momentum was shifting back toward growth.
No expert can predict the future with certainty. Markets change, unexpected events happen and forecasts can be wrong. The decision to buy always comes down to your personal circumstances, including your income, deposit, goals and time horizon. If all of those are in order, timing the market perfectly matters less than most people think.
To understand the rate-cutting environment that drove this shift, our guide to the RBA’s June 2019 rate cut explains which lenders passed on the full reduction and what it meant for home loan repayments.
Common questions
Q: Did property prices recover after mid-2019?
Yes. The recovery that started in June and July 2019 continued through the second half of the year and into early 2020. By early 2020, prices in most capital cities were back near or above their 2017 peaks. COVID-19 caused a brief pause, but the subsequent recovery from mid-2020 was even stronger.
Q: What caused the property market to turn around in 2019?
Several factors aligned at once. The RBA cut the cash rate twice in June and July 2019, APRA eased mortgage assessment rules, and the federal election removed uncertainty around negative gearing and capital gains tax policy. Buyer sentiment shifted quickly once these changes were confirmed.
Q: How did auction clearance rates signal the market turnaround?
Capital city auction clearance rates reached 70.6% in July 2019, the highest in more than a year. Sydney led with 81.5%. High clearance rates indicate strong buyer demand relative to supply, and are a reliable leading indicator of price growth in Australian property markets.