Australian Home Prices May Rebound on Low Rates, Easy Credit

(Bloomberg) — Australian home prices may have bottomed out and could be set to rise through the end of the year on the back of lower interest rates and easier credit, according to Bloomberg Intelligence.

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Residential properties stand along a street in Brisbane, Australia, on Tuesday, May 7, 2019. Australian central bank chief Philip Lowe dashed expectations of an interest-rate cut, looking through recent weakness in inflation to hitch the policy outlook to a labor market that he says remains strong.

Property prices have fallen just 3% since the Covid-19 crisis began, defying concern of a steeper slide. A plan to ease responsible-lending rules and mounting speculation for further loosening of monetary policy in coming months may unleash a wave of borrowing, Bloomberg Intelligence analyst Mohsen Crofts said in a report Wednesday.

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What Bloomberg Intelligence says:

Home prices may have reached a near-term bottom in most Australian cities, with the prospect of easier credit likely to boost home-buying activity. Federal government and Reserve Bank of Australia policies may result in a spree of additional borrowing through year-end as pent-up buyer demand is released.

-Mohsen Crofts, analyst

Brisbane, Sydney and Perth will lead the recovery, while Melbourne could fare worst due to the state’s strict lockdown after a resurgence in Covid cases.

Accelerated tax cuts and further support for young home buyers are also likely to be a “strong positive” for home prices, Crofts said. The biggest threat to the outlook is a potential “second peak” in job losses that could be more focused on full-time professional roles, the report said.

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©2020 Bloomberg L.P.

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