Experts predict Australia's property market is likely to bounce back after Scott Morrison's unexpected re-election
Property prices in Sydney and Melbourne have slumped back to 2016 levels - but that could all change after Scott Morrison's unexpected victory, experts have claimed.
The Sydney and Melbourne property markets are showing early signs of ending their steep slides, with a strong bounce in auction clearance rates on the first Saturday after the federal election.
Preliminary figures from CoreLogic show that 69.9 per cent of homes that went under the hammer in Sydney found a buyer, while 62.9 per cent of auctions in Melbourne cleared.
Those figures will be revised lower once extra results are submitted by agents, but Westpac senior economist Matthew Hassan expects the final result to come in about 65 per cent for Sydney and 60 per cent for Melbourne — the highest rate since April last year.
'Scomo effect': House prices tipped for huge spike by July
Australia’s housing market downturn is coming to an end, with leading economists predicting a spike in house prices as soon as July. Property prices fell one per cent nationally in January, with CoreLogic data showing a smaller decline of 0.5 per cent in April – a result tipped to be repeated for May. It comes after Commonwealth Bank's incoming, home loan applications jumped to a 10-month high and strong predictions of interest rates cuts.
"Demand has clearly seen an initial boost from the clearer prospect of interest rate cuts and the removal of uncertainty around housing related tax policy following the Coalition's re-election," Mr Hassan wrote in a note.
"Prospective changes to loan serviceability assessments have likely given support as well."
Last week, bank regulator APRA flagged a change in the way banks assess home loan applications, which would result in people being able to borrow larger sums.
Housing recovery remains 'unclear'
Mr Hassan said the auction clearance rates in Sydney and Melbourne are now above the 50-55 per cent range "associated with price stability in both markets".
Auction volumes also bounced back after election day, which had seen only 930 properties being auctioned, with 2,041 properties going under the hammer on Saturday — only slightly fewer than the same week a year ago.
Aussie dollar sidelined as bonds boosted
Australian bonds, like those elsewhere, have been boosted by a run of soft global economic data and worries the Chinese-US trade dispute could last for years. The Australian dollar was stuck on the sidelines while government bonds took the starring role as mounting concerns about global growth drove yields to all-time lows. The Aussie was holding tight at 69.24 US cents on Wednesday having spent three sessions in a snug 69.13-69.41 US cents range. The bull run for bonds was timely for Australia's government as it sold $3 billion in a new 2031 line that offered a record-low coupon of just 1.
However, he cautioned that the results did not yet indicate another bounce in home prices, and might not be sustained.
"The extent to which this generates a recovery in housing markets remains unclear," Mr Hassan warned.
"While the initial response is positive, it remains to be seen how 'follow through' the move has."
Auction markets were more subdued in most other cities, with Canberra's clearance rate similar to Melbourne's, Adelaide's a little lower at 57.5 per cent, but Brisbane and Perth both below 40 per cent.
However, the auction markets in other cities are much less active than Sydney and Melbourne, with only a relative small percentage of properties being sold by that method.
House price slide continues, but analysts say the end is nigh.
Home price falls are continuing to slow in Australia's two biggest cities, as an increase in auction clearance rates prompts some analysts to predict that the property market will bottom this year. CoreLogic's latest monthly home value index shows prices fell an average of 0.4 per cent in May, with regional areas declining a smaller 0.2 per cent. Darwin and Perth led the declines, with prices off 1.6 per cent and 1 per cent respectively last month. require(["inlineoutstreamAd", "c.