Commonwealth Bank, the nation’s largest property lender, says there are clear signs that big-city property markets have bottomed and are set for a rebound.

Property prices are expected to begin climbing back into positive territory in the second half of the year and should generate positive returns in 2020.

Interest rate reductions, tax cuts, easier borrowing, rising population and improved sentiment are combining to boost market activity and offer early evidence of sustained improvement. The federal election result has removed fears of changes to negative gearing and capital gains tax.

“Home buying intentions have been negative since 2018, but current readings suggest the market is finally turning,” CBA chief economist Michael Blythe says. “The big question, with interest rate cuts in place and tax cuts coming, is whether policymakers have done enough.”

CBA research predicts higher lending growth to property investors that will support dwelling prices, particularly as rental yields are higher than term deposit rates, which are sliding towards zero as cash rates are cut.