Major ASX bank Australia and New Zealand Banking Group (ASX: ANZ) now thinks that house prices are going to grow in 2019.
This might be akin to a barber predicting that more people are going to need haircuts this year, but there are a number of factors backing ANZ's positive outlook.
The bank is now expecting house prices to bottom in the next few months and rise modestly during the end of 2019 and then grow by 3% in 2020 according to reporting in the Australian Financial Review.
For property owners, this would be a welcome change from what we've seen over the past year. The CoreLogic Hedonic Home Value Index Results showed that the annual national change in property values was a 6.9% decline to June 2019. In Sydney it was a 9.9% decline over the 12 months and in Melbourne it was a 9.2% drop.
Whilst the royal commission and lending restrictions were blamed for the decline of property prices, economists are now expecting an increase thanks to the federal election, the RBA cutting rates and APRA adjusting its interest rate buffer for the banks from 7% to the current loan rate plus 2.5%.
You can see why ANZ economists are hopeful on property price growth again, however they aren't expecting a V-shaped recovery. It might take a while for the recent memory of negative declines to filter through to the rest of the Australian population. Some households are doing it tough and seeing an increase with mortgages in arrears over 90 days.
It's interesting that ANZ are feeling confident when the recent ANZ-Roy Morgan consumer confidence survey showed that confidence was down 1.5% last week following a decline of 1.1% the week before.
Foolish takeaway
Whilst I don't think we're going to see 1% monthly falls of property again, I don't think it's clear skies from here. When a lot more properties come onto the market in Spring we could see further price pressure for people that feel like that have to sell for the price they can get rather than waiting for the best price.