HSBC Holdings Plc has more than doubled its forecast for Australian property price increases next year as low-interest rates and looser borrowing rules send buyers flooding back into the market.
The bank now expects nationwide prices to rise by 5% to 9% in 2020, up from previously expected gains of 0% to 4%, Paul Bloxham, HSBC’s chief Australia and New Zealand economist, said in a note on Tuesday.
Major cities Sydney and Melbourne are expected to lead the charge, as in the previous boom. HSBC is now forecasting gains of 8% to 12% in Sydney next year and 10% to 14% in Melbourne.
The rapid turnaround in the market, where just six months ago the question was how much further prices would fall, comes at a time when the overall economy is weakening.
The Reserve Bank of Australia has cut interest rates three times since June in an attempt to boost hiring and investment, but so far the main impact of the easing seems to have been to push housing prices higher.
In addition to mortgage rates at record lows, the housing market rebound is being driven by:
- A loosening of regulations on lending
- The re-election of a housing-investment friendly government and
- A shortage of supply of established homes
A record 1.46 million numbers of tourists came to our shores from China in the year to September – a doubling in tourist numbers over the past six years. On average these Chinese tourists stay in Australia for 13 days and thus provide a solid contribution to the income of Aussie businesses while they are here.
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