Australian property downturn seen ending in 2020: Reuters poll

PHOTO: FILE PHOTO: An aerial view of houses located in Sydney’s eastern suburbs, Australia, June 5, 2014. REUTERS/David Gray/File Photo

SYDNEY (Reuters) – Australia’s ailing housing market is expected to turn around next year, but the recovery will be modest and a far cry from the boom times of double-digit price gains, a Reuters poll shows.

Australian home prices will likely end this year about 2% lower, according to a median of 12 analysts.

But they are forecast to rise 2.75% next year and by 3.50% in 2021.

In 2018, prices skidded nearly 5% to mark their worst year since 2008 largely due to tighter credit conditions and waning investor appetite.

The Reserve Bank of Australia (RBA) has cut interest rates twice since then to a record low of 1% and has pledged to keep policy stimulatory for a long time to come.

“We expect that lower interest rates will have a more powerful effect on housing prices than commonly expected,” Macquarie economist Justin Fabo told Reuters.