What will the 2019 economy look like?
As 2019 heats up, many predictions for the Australian economy are focused on recent lending announcements and the housing market
Here's a look at some of the latest.
There was a lot of negative talk about the housing market in 2018 as prices fell across the nation, especially in the big cities. At the start of 2019, the Guardian reported that prices dropped 11.1 per cent in Sydney and 7.2 per cent in Melbourne since their peaks in 2017. Nationally, prices fell the most in one quarter in late 2018 since 2008.
But, data from the International Monetary Fund helps put these housing price falls into perspective: in the last 10 years, national home prices rose 70 per cent. So, the falls over the last year don't seem so bad, and the market could see a fine recovery.
The ongoing fall could lead to a big housing price correction in 2019, though prices could also continue to fall in the first quarter.
Lending Restrictions loosening
Some say that the housing market drop could be due to tightening lending restrictions. However, 2019 may see more loosening of these.
In December 2018, Australian Prudential Regulation Authority (APRA) made a big announcement: it was removing the interest-only benchmark for residential mortgage lending. The limit, put into place in 2017, had been 30 per cent for interestonly loans. What's more, APRA also removed the 10 per cent annual cap on investor credit growth.
Intended to moderate high-risk lending, APRA said the limits had served their purpose. These could be signs that lending restrictions could continue to loosen.
Things will get political
There are some big elections coming up in 2019, including one in New South Wales in March and the federal election in May.
While there is a stronger jobs market that's helping to keep Treasury thriving - with a surplus of billions expected in fiscal year 2018/19 - it's unclear what government spending will look like come election time.
Other political concerns on a global level are the effects of a Brexit deal and the possibility of a US/China trade war. Whatever 2019 brings, most are predicting volatility in several areas of the overall economy.
For more information about the Australian market and where home buyers fit in, contact our team today