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Sydney property market forecast & guide 2020

clock icon December 10, 2019
tag iconSydney Property Tips Buying Property

The Sydney property market is forecast to continue its growth in 2020. 

While housing values continued to decline in the first half of the year, the market is on the rebound. Record low interest rates and improving consumer sentiment have created a positive change in the wind, with growth expected to continue in the new year.

Whether you’re stuck on public transport or on a couch with a food coma post-Christmas lunch, this guide will get you up to speed. Read on for a complete recap of what happened, what to expect, and how you can prepare to buy property in Sydney in 2020.

Sydney property

Sydney property market 2019: What happened

While Sydney property prices continued to fall in the first half of 2019, the last few months have shown signs of recovery. A combination of factors is driving an upturn in the market, including lower interest rates and improving consumer sentiment.

Let’s look at the events that shaped the market this year, and how these are setting trends for the next:

Royal Commission

In February, Commissioner Hayne released his final recommendations for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. After a year of uncertainty and a spotlight on the banks, the report found no further tightening of lending was required. Nonetheless, banks are now treading cautiously.

The lender crackdown on borrower income and living expenses will continue for the foreseeable future. More than ever, it is important you ensure your finances are organised before applying for a home loan.


In May, the Liberal party won the Federal election and, in doing so, removed the uncertainty that shrouded the property market. Labor’s proposed changes to negative gearing and capital gains tax (CGT) discounts created a great deal of concern, particularly for investors.

With political uncertainty removed, buyer activity has since picked up. Additionally, the First Home Loan Deposit Scheme was announced, guaranteeing thousands of new buyers an incentive to enter the market.

Back-to-back Rate Cut

In June and July, the Reserve Bank (RBA) made back-to-back rate cuts. After sitting idly at 1.5% for almost three years, the official cash rate was dropped to 1% due to slower than expected trends in the economy. Most lenders passed on a significant portion, if not all the benefit, to Aussie borrowers.

New Lending Standards

In July, the Australian Prudential Regulation Authority (APRA) softened restrictions on the assessment of home loan serviceability. Made off the back of two rate cuts and the Royal Commissions’ recommendations, the changes have increased potential borrowing power.

Please note, while this may increase the average loan size eligible to a borrower, it does not make it any easier to be approved. Banks and lenders will continue to remain conservative in who they lend to.  

Comprehensive (Positive) Credit Reporting

While the old system was based on negative credit events, the new credit reporting system takes a more holistic picture into account. Effective from July 2019, the major banks are now sharing 100% of their credit data.

It’s a win-win for most Aussie borrowers, but it does give lenders more information and therefore possible reasons to question a loan application. Credit scrutiny will continue to impact loan applications as other lenders follow suit in the next year or two.

Third Rate Cut

In October, the RBA cut interest rates for the third time of the year to a historic low of 0.75%. Stagnant employment, inflation and global economic uncertainty were the Reserve Bank’s reasons for cutting. Record low interest rates have since helped reignite the Sydney and Melbourne property markets.

Heading into 2020

Positive market sentiment and access to cheap credit will continue to put upward pressure on Sydney property prices, albeit slowly.

Sydney property forecast 2020: What to expect

Low interest rates and increased certainty around policy are all contributing to a positive change in sentiment. The synergy of all these factors are central to the recovery of the Sydney market, which is driving national property values, alongside Melbourne.

Given trends, here is what we can expect of the property market in the next year:

Market Recovery

The unexpectedly quick turnaround was fuelled by a convergence of events in June/July 2019, including rate cuts and regulatory certainty. As we reach the final month of the year, Corelogic reported Sydney recording the largest monthly gain since 2003 and positive annual growth for the first time since the downturn.

Many forecasts suggest the speed of growth to slow down and be more subdued.

Moderate Price Growth

Market growth is certainly a welcome change, but don’t expect it to continue at the speedy rate of the past five months. The initial excitement of a rebound no doubt caused a spike in growth, but this should settle. There should be less price volatility with many causes of market uncertainty now out of the way.

Expect to see Sydney property values find a steady annual growth rate of around 5% in 2020.

First Home Buyers in January

Like when stamp duty concessions rolled out in 2017, there will be a flood of first home buyers getting into the market when the new First Home Loan Deposit Scheme rolls out in January.

Working on a first-in, best-dressed basis, the scheme is limited to 10,000 first home buyers. As this number accounts for roughly 10% of Australia’s annual first home buyers, expect a massive surge at the beginning of the year. This may or may not give an extra boost to price growth.

Supply of Listings

Property listings remain persistently low despite the up-tick in prices. Regardless, things are improving, with auction clearance rates double what they were the same time last year.

Many Sydney property sellers are still sitting on the fence, waiting for prices to reach previous levels. This limited supply is creating a level of urgency in the market as buyers make the most of finite affordability. As selling conditions improve, there is the probability that listing numbers will lift in 2020 and this may ease the urgency driving up prices.

Further rate cuts

At the RBA’s final meeting for the year, the Board decided to leave the cash rate unchanged at 0.75%. While the three rate cuts of 2019 helped house price recovery, the RBA is still assessing the impact on the greater economy.

With unemployment, wage growth and inflation remaining stagnant, there is potential for at least one cash cut in the first half of 2020.

New lenders on the rise

More borrowers than ever turned away from the big four banks in 2019 in favour of small lenders with more competitive rates. Most of the new lenders were the only ones to pass on all three rate cuts in full to borrowers.

It’s not only the cheaper rates, the royal commission has impacted trust in the big institutions. While this doesn’t directly impact prices, we may see more Aussies make the switch in 2020.


A less likely scenario would see APRA intervene if a strong price increase continues. The current speed of growth is unsustainable long-term, because current conditions cause the cost of house prices to become reliant on low interest rates and debt.

Given previous comments of slowing growth, an immediate intervention is not expected. More than likely, prices will slowly edge towards the peak over the next year or two.

Tight lending

The rigorous assessment of income and expenses will continue, and the new credit reporting system is giving lenders more information to assess.

Inconsistencies with account conduct (such as late payments) and undisclosed liabilities (e.g. pay later schemes like Afterpay) are proving to be major hurdles for new loan applicants.

Putting it simply, getting loan approval is harder than ever despite credit being cheap. As a result, approval turnaround times are longer, and thus the buying process is slower. Heading into 2020, the tight hold on who gets a loan will continue to impact available credit, and therefore price growth.

Will the property market fully recover in 2020?

The recovery of Australia’s housing market is predicted to continue into the new year.

Remember, it was only last year that the media was predicting a disaster scenario for the housing market, but they have been proven wrong. The market bottomed out in June 2019 and has been rising ever since.

One thing to note is the recovery has been quicker than many forecasts predicted. The growth rate over the last few months has been unprecedented, caused by a swift change in consumer sentiment thanks to cheap credit and regulatory certainty.

Despite the quick rebound, don’t expect the market to reach new highs any time soon. Australia’s housing boom lasted several years, so it can take some time for a full recovery. A correction had to come sooner rather than later.

As with all markets, they work in cycles with both peaks and troughs experienced. Most signs suggest the speed of growth will be more subdued in the new year, gradually reaching the peak in 2021.

Property is a long term game

A major investment like a home is something you’ll want to hold onto for 10, 20, or even 30 years. Therefore, you should always consider the long-term outlook of the market. Think of key drivers like population growth – housing demand will need to keep up with our growing population.

Founder of Successful Ways, Scott Durrant, has been in the industry for over 16 years and has seen this occur multiples times. He highlights property is a long-term investment and you should enter the process with that in mind.

“If you are buying a home, you’re not going into the market with the intention of selling in the next few years. You are buying for the long term. I always say, the time to buy is when the banks will lend to you.”

Deciding on the perfect moment to enter the market isn’t possible. What is known is conditions are more affordable and credit is cheap. Rather than trying to predict the right time, you’re better off looking at your own position. Are you ready to make this commitment on a financial level?

“Those who are organised have a greater chance of success.”

Now you know how the market looks, how do you prepare yourself if your New Year’s resolution is to a buy property in 2020?

New Year fireworks Sydney housing

Preparing yourself to buy property in 2020

It has been another interesting year for the property market. House prices are recovering, first home buyer lending continues to increase, and borrowers have access to record low interest rates.

The uncertainty of the previous year has softened, and housing affordability is better than it has been for several years. As more people take advantage of current prices and cheap credit, prices in Sydney will continue to increase.

It is hard to predict the market but knowing current conditions and what may change will put you in a better position to buy property in 2020. The new year isn’t far away, so start considering your options now.

1. Identify a goal

Your New Year’s resolution needs to be specific if you want to achieve your property goals. We all know how important it is to have objectives to reach our end goal, moreover, they should be specific enough to keep you heading down the right path.

Work out what you want to buy, where you want to buy and give yourself a time frame. A specific goal would be something like:

  • “Buy a 2-bedroom apartment in the inner-west of Sydney by April”
  • “Purchase a 3-bedroom house as an investment property in one of Brisbane’s growth areas by June”

Go that step further and narrow down your search to a specific suburb.

2. Be ready to act

Procrastination is the enemy of success. If you want to make the most of the current market, don’t dawdle. If you are buying a property with a partner, make sure you are both on the same page and are equally motivated.

The key is to sit down, figure out what you want, and then start doing your research. Property is a major investment, so you should have a clear understanding of the market and the area you are considering.

Keeping this in mind, you may be able to find a more affordable option by investigating surrounding suburbs of your ideal location. These neighbouring areas usually offer a similar lifestyle at a cheaper rate.

  • If you are buying a property as your own home, consider which suburbs will be convenient for you in terms of your lifestyle and whether you need an apartment or a house.
  • If you are looking for an investment property, you’ll need to consider properties that meet your investment strategy, have good capital growth potential and are easy to tenant. Remember, the ideal features of an investment are not always the same as your own dream home.

3. Set a realistic savings budget

Property is no small investment. If you’re planning to buy, you will probably be looking to get a home loan. Therefore, set yourself some good saving habits. For first time home buyers, this will be more relevant going into 2020.

Start by making a list of your expenses. It’s important that you are realistic. Make a comprehensive list and understand where your money is going and where you can cut back if necessary when you get a home loan.

Availability of credit is already tight, and we can expect this to continue. We’ve noticed lenders become increasingly thorough when looking through client expenses.

Our advice:

  • Be aware of how much you are spending on things like entertainment or your enthusiasm for takeaway food – ask yourself if the expenses are justifiable (or your lender will).
  • Keep yourself on track by setting a savings target and review this every single month. This comes back to the importance of being specific.

4. Get your finances organised

With your savings sorted, it is time to get the rest of your finances in place. Make sure you know your income and expenditure, plus how this will tie in with your future goals (such as your career or family).

When making such a large investment, the help of a professional can go a long way, so speak with your bank or mortgage broker. In short, by understanding your situation, they can help determine what you can afford and how much you can borrow. Using an online mortgage calculator can help you work out your borrowing power.

To save yourself a lot of time before you start looking at properties, it is a great idea to get pre-approval. This will make the later stages of the home buying process run a lot smoother for yourself, removing a whole bunch of unnecessary stress.

If you’re going for approval, check out this loan assessor’s tips for getting a home loan approved.

Mortgage broker advice for home loan approval

5. If in doubt, seek professional advice

Let’s face it, buying a property isn’t easy. There are a long list of services and people you must jump between before reaching that end goal.

From finding the right home loan, getting approval, searching for the property, building inspections, and the legal legwork (via a conveyancer or solicitor), the road to settlement can seem daunting.

Having a professional team on your side can make all the difference to your success, and probably your sanity. Our Sydney mortgage brokerage offers everything you need under one roof to help you buy that dream home of yours. Organise your free home loan consultation with us today to find out the best options and rates available to you.

Begin your property hunt

To sum up, softer prices in the Sydney market have been a welcome change. But, as people take advantage of affordable conditions, prices will once again shift in the sellers’ favour.

While borrowers can expect cheap rates, the limited availability of credit is the norm in 2020. Get your finances in order, set realistic objectives, and go for pre-approval. The work you put in early will save you time later.

Remember, do your research, educate yourself, and become an expert in the area you want to live. Understanding the market will put you in a position to make smarter decisions.

Buying a home and don’t know where to start?

Get in touch with our experienced Sydney property and wealth advisory team. We offer an integrated approach, which means there is an expert to help you at each step, including brokers, solicitors and financial planners. With a professional team by your side, the complete buying process is smoother and easier from beginning to end.

We also educate with Sydney’s most popular first home buyers course. No matter where you are in your journey, we wish you all the best in 2020!

Contact us today

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