Invest
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the COVID-19 vaccine.
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the COVID-19 vaccine.
In a report released on Monday, Westpac’s chief economist, Bill Evans, said the bank has now lifted its forecasts to double-digit growth across the nation as momentum across the capital cities continues to swell until a predicted stall in 2023.
The economist stated that the Australian market as a whole is tipped to expand by 10 per cent in both 2021 and 2022.
Sydney dwellings prices are estimated to grow in line with Australia, while Melbourne is expected to rise by 8 per cent in 2021, followed by 10 per cent growth in 2022.
Brisbane (10 per cent over both years), Perth (12 per cent this year, 8 per cent in 2022), Adelaide (10 per cent, then 8 per cent) and Hobart (8 per cent, then 6 per cent) are also showing strong signs of growth over the next two years.
Westpac’s chief economist pointed to the high clearance rates across Sydney and Melbourne, declaring a “sellers market” until new listings become available.
“The upturn is being supported by record-low interest rates, the confident expectation among borrowers that these rates will remain low for years to come, ample credit supply and an improving economic backdrop, as the rollout of vaccines promises to bring the pandemic to an end and drives a sustained lift in confidence,” Mr Evans said.
While noting some of the strong activity relates to markets playing catch-up following the pandemic, Mr Evans pointed to high dwelling approvals and a rise in new lending across the final quarter, which he said demonstrated strong confidence in the current housing market.
“However, even allowing for this, the picture is unambiguously strong. Most tellingly, buyer demand has run well ahead of ‘on market’ supply, with sales outstripping new listings by 34 per cent over the last six months and ‘stock on market’ down to just 2.5 months of sales – the long run average is 3.8,” the economist said.
Mr Evans also pointed to strong gains in regions where the virus remained subdue over the coming months, before the pendulum swings back to Sydney, Melbourne and Brisbane in 2022.
“The upswing is also likely to see a rebalancing towards investors, particularly as affordability constraints re-emerge for owner-occupiers, including first home buyers,” Mr Evans explained.
Touching on the likelihood of a prolonged interest rate hold, Mr Evans noted that if the RBA is no longer prepared to continue committing to ‘three years on hold at 0.1 per cent’ rhetoric in 2022, Westpac's analysis of their forecasts for inflation and wages suggests official guidance at that point will still be to expect rates to remain on hold for a number of years.
“This adjustment will increase fixed-term mortgage rates and may take some heat out of the market at the margin but is unlikely to derail what will be a very well-established price upturn by 2022,” he said.
Despite remaining bullish, the economist pointed to falling migration levels being a medium term headwind for the property market.
“If borders remain closed for longer or migration inflows are slow to restart, that could lead to a market-wide physical oversupply of dwellings by 2022. How that may influence market conditions and price growth is unclear,” he said.
“For example, rental vacancy rates may remain elevated for longer, perhaps even pushing higher, but that may not do much to deter investors seeking expected price gains, particularly as rental yields are likely to remain above funding costs.”
About the author
About the author
Property
9 questions to ask when buying a CBD apartment for the first time
If you’ve been eyeing CBD apartments, the new year is the ideal time to start something new that could help you take one step closer to your dream – like finally buying your own home. ...Read more
Property
The 20 Australian suburbs where it’s hardest to rent
New research has revealed just how tight some of Australia’s rental markets have become. ...Read more
Property
8 hacks to boost property value without breaking the bank
With record-high property prices all over the country, more and more property owners have been contemplating selling their property. If you’re one of those intending to sell, here are some simple ...Read more
Property
Houses v Apartment: Which is the better investment?
Here are the top things to keep in mind when choosing an apartment versus a house for an investment. ...Read more
Property
4 trends to leverage in your 2022 investing journey
After a year of staggering price growth across Australia, many investors might be wondering: where do we go from here? ...Read more
Property
2021 delivered the biggest house price rise in decades
Property prices surged in 2021 despite slowing growth throughout much of the year. ...Read more
Property
The best suburbs for property growth in 2022 – Part 2
Growth is currently forecast for these 15 suburbs in the year ahead. ...Read more
Property
The best suburbs for property growth in 2022
Properties in these suburbs are expected to grow in value over the next year. ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Property
9 questions to ask when buying a CBD apartment for the first time
If you’ve been eyeing CBD apartments, the new year is the ideal time to start something new that could help you take one step closer to your dream – like finally buying your own home. ...Read more
Property
The 20 Australian suburbs where it’s hardest to rent
New research has revealed just how tight some of Australia’s rental markets have become. ...Read more
Property
8 hacks to boost property value without breaking the bank
With record-high property prices all over the country, more and more property owners have been contemplating selling their property. If you’re one of those intending to sell, here are some simple ...Read more
Property
Houses v Apartment: Which is the better investment?
Here are the top things to keep in mind when choosing an apartment versus a house for an investment. ...Read more
Property
4 trends to leverage in your 2022 investing journey
After a year of staggering price growth across Australia, many investors might be wondering: where do we go from here? ...Read more
Property
2021 delivered the biggest house price rise in decades
Property prices surged in 2021 despite slowing growth throughout much of the year. ...Read more
Property
The best suburbs for property growth in 2022 – Part 2
Growth is currently forecast for these 15 suburbs in the year ahead. ...Read more
Property
The best suburbs for property growth in 2022
Properties in these suburbs are expected to grow in value over the next year. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
