Economists fear Australia may face its first recession since 1991 as the nation looks set for its worst economic performance in almost three decades, leading to mounting speculation Australia’s housing industry could be heading for a big slump.
In a recent report, 38% of economists surveyed by the National Association for Business Economics said they believe a slowing economy will tip into recession by 2020.
The nation’s GDP growth trend is at its lowest point since March 2001 and continues to decline, the NABE said.
On the weekend of September 21-22 the percentage of successful auctions in Sydney and Melbourne rose slightly, but the numbers of housing stock were lower than usual.
However, the weekend’s good news is only small comfort for the market, as Australian Bureau of Statistics figures released last week show an average decline of 7.4% in Australian residential property prices since the end of the June quarter just a year ago. Melbourne and Sydney residential property prices have dropped by almost a whopping 10 per cent in that time.
Frankston real estate agent Andrew Condon remains confident the housing market will grow despite declining financial trends.
“The [housing] market is certainly starting to pick up … the [housing] market has found its feet off the back of a lot of uncertainty at the start of the year,” said Condon.
“People have been saying residential real estate in Melbourne is in a bubble for decades.
“In my experience and statistically speaking, residential real estate is always a fairly safe bet in our area, with prices often doubling over a 10-year period.”
The Real Estate Institute of Victoria’s statistics show a drop of 7.2% in housing sales in Frankston throughout 2019, but Condon focused on the last three months, which have shown slight growth.
Residential sales typically rise throughout Spring and Condon expects that trend to continue this season.
“A lot of owners hold off launching properties until after Grand Final Day (September 28),” said Condon.
“With Spring in full swing, a lot of properties start to hit the market so there will be a good level of supply to choose from.”
Anthony Joel and his partner purchased a house earlier this year, despite reports of a possible downturn in the market. He said it was more important to be paying off his own home rather than paying rent.
“I do believe the housing market will remain relatively strong. These things always seem to go up and down … no one really knows what it’s going to be like next decade,” said Joel.
“You’ve got to live somewhere; we didn’t think it was a bad option to buy [now].”
Adrian Kelly, president of the Real Estate Institute of Australia, said the REIA’s statistics showed a decrease in prices in the past year, but expected this to mark the bottom of the cycle.
“This is a continuing decline since June 2018 for both houses and other dwellings, but the decline is slowing,” said Kelly.