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TIP: the worst is over and buyers are coming back - so why is everyone so gloomy?

Are we building on rock or sand?

Mirvac chief Susan Lloyd-Hurwitz (pictured) reckons it's the former, saying the company is poised to take advantage of the upswing in market sentiment across its residential development projects in Sydney and Melbourne. According to Ms Lloyd-Hurwitz, the slump is over and 2020 is going to be a corker.

REA chief Owen Wilson is feeling equally optimistic. He says rising house prices and freer credit are good news for the real estate classifieds business, and predicts next year is going to be a much better one for developers and builders.

CBA chief economist Michael Blythe has drawn a line in the sand for a turnaround in the fortunes of home builders, saying mid-2020 will be the turning point. If that's true, it'll fall neatly into previous trend patterns, which tell us it usually takes a good 12 months for the new home building sector to catch up with any changes in the existing home market.

Overall, CBA has revised up its prognosis for 2020 residential housing price growth; it now thinks, as a result of what we've seen in Sydney and Melbourne over the past four months, that national capital gains will hit 6.1 per cent next year. It expects Sydney to rise by 7 per cent and Melbourne by 8 per cent, with weakest growth in Adelaide and Hobart (3 per cent) and Perth (2.5 per cent).

According to Knight Frank's Outlook 2020 Report, commercial property is also staring down the barrel of a cracking 2020. It thinks the RBA will bring interest rates close to zero, which will attract investors seeking higher-yielding assets - resulting in double-digit growth for commercial property next year.

So why is everyone moaning?

For a start, Australian household debt is among the highest in the world. On average, Australian household debt is close to 200 per cent of income, most of which is tied up in mortgages. This is less of an issue in a low interest rate environment - but if that changes, Australians won't have enough to pay the piper, especially with stagnant wages.

This explains why consumers aren't spending nearly as much as the Morrison government had hoped after tax and interest rate cuts. This situation even nearly led to another rate cut on Melbourne Cup Day, according to RBA meeting notes released yesterday; the central bank apparently held back out of sensitivity to already fragile consumer confidence.

Sirona Capital is in the news today boasting about its ability to sell luxury apartments in Perth due to pent-up demand. Let's hope what we're seeing right now goes deeper than that.

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