'The worst is over': How property prices are expected to start recovering in early 2020 - with first-home buyers behind the 'green shoots' as capital city affordability ratings are revealed
- CoreLogic head of research Tim Lawless expecting recovery from early 2020
- He predicted first-home buyers after apartments would rehabilitate property
- Hobart is Australia's third least affordable market after Sydney and Melbourne
Australia's housing market downturn is expected to continue for another year with first-home buyers tipped to drive a slow recovery.
Tim Lawless, the head of research with real estate data group CoreLogic, said the Sydney and Melbourne property markets were likely to bottom out in the first half of 2020.
'The worst is probably over,' he told Daily Mail Australia on Tuesday, on the sidelines of a Committee for Economic Development of Australia luncheon in Sydney.
Australia's housing market downturn is expected to continue for another year with first-home buyers expected to drive a slow recovery
'We're already potentially seeing some green shoots, in the senses we aren't seeing values falling as fast as what they have been.'
CoreLogic data for April, to be released on Wednesday, will show a 0.6 per cent monthly decline in Sydney's median house price.
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As recently as February, detached house values in Australia's biggest city had fallen by 1.1 per cent in just one month.
Mr Lawless said younger first-home buyers, unable to afford a house, would be likely to drive a recovery as they snapped up apartments in Sydney and Melbourne closer to the city and took advantage of stamp duty exemptions.
Core Logic's Tim Lawless said younger first-home buyers, unable to afford a house, would be likely to drive a recovery as they snapped up apartments in Sydney (pictured) and Melbourne closer to the city and took advantage of stamp duty exemptions
'We're seen first home buyers becoming more active, particularly in New South Wales and Victoria where there have been the benefits of stamp duty concessions,' he said.
'But also where affordability is improving, they're not competing with investors as much.
'I think when the market bottom's out, it's probably some time in 2020, we shouldn't expect there's going to be a rapid recovery - the recovery period will be relatively slow.'
By the first half of 2020, Mr Lawless is expecting Sydney and Melbourne property prices to have fallen by 18 to 20 per cent, compared with where they peaked in 2017, as unemployment remained low.
Since peaking in July 2017, Sydney's median house price has dived by a record 16.1 per cent, or by more than $169,000, to $880,594 despite record low interest rates.
Despite this fall, a Sydney property still costs 9.1 times an average household income, in a city where median house and apartment prices are $782,473.
In Melbourne, where median property values stand at $624,425, homes cost 8.2 times an average household income.
Despite having a much smaller population, Hobart (pictured) is now Australia's third most expensive capital city to buy, with a price to income ratio of 6.7, in a market with a median price of $464,168 following a six per cent increase during the past year
Despite having a much smaller population, Hobart is now Australia's third most expensive capital city to buy, with a price to income ratio of 6.7, in a market with a median price of $464,168 following a six per cent increase during the past year.
Adelaide's median-price property, of $426,990, is 6.4 times a typical household income.
Tim Lawless: 'We're already potentially seeing some green shoots'
It is ahead of Brisbane, where the property price to household income ratio stands at six, in a city with median house and unit prices of $489,832.
Perth, facing its second downturn in five years following the end of the mining boom, has a price to income ratio of 5.6, where homes have a median price of $442,716.
Darwin is Australia's most affordable capital city, with a price to income ratio of 3.6, in a city where median property prices stand at $400,316 while Canberra's equivalent ratio stands at five, where median real estate values are $595,212.
Mr Lawless said the Reserve Bank of Australia was likely to cut interest rates twice in 2019, which would take the cash rate to a new record low of one per cent, to remedy the downturn sparked by the Australian Prudential Regulation Authority's crackdown on investor and interest-only loans.
'Now with housing values lower, potential interest rates coming down a little bit further, there's a lot of stock on the marketplace - those active buyers can negotiate very hard,' he said.
