Invest
House prices tipped to surge 17 per cent in 2021: ANZ
A combination of strong demand and cheap credit will continue to drive the housing market in 2021, with economists now predicting the major cities will grow by as much as 17 per cent, new research has revealed.
House prices tipped to surge 17 per cent in 2021: ANZ
A combination of strong demand and cheap credit will continue to drive the housing market in 2021, with economists now predicting the major cities will grow by as much as 17 per cent, new research has revealed.
The latest ANZ economic insight has revealed that the impact of low interest rates on housing has more than offset rising unemployment levels and low population growth.
According to ANZ’s senior economist, Felicity Emmett, house prices in Sydney and Perth are predicted to jump by 19 per cent each in 2021, followed by Hobart, which is predicted to rise by 18 per cent.
Melbourne and Brisbane are tipped to grow by 16 per cent each, with Adelaide lagging behind with 13 per cent growth in 2021.
The economist noted that owner-occupiers are driving the market, with new housing loans up 80 per cent since the lull experienced in May last year.
“Buyers are taking advantage of historically low interest rates, particularly fixed rates, as well as various government support programs,” she said.
“First home buyers are also benefiting from government support in the form of first home owner grants and reduced stamp duty.”
Ms Emmett highlighted that strong consumer sentiment is putting upward pressure on houses, with low stock levels and a fear of missing out seen as the key drivers of house price growth.
However, this strong growth is predicted to slow post June.
“The first half of 2021 is likely to be stronger than the second half. By June, we expect prices to be rising at a more moderate pace given the end of government programs like JobKeeper and HomeBuilder, and a lift in fixed mortgage rates,” she said.
The big four bank is also expecting regulators to step in to slow down an overheating market through changes to macro-prudential policies.
“We expect macro-prudential restrictions will be introduced later this year. Signs of easing lending standards will be the trigger for the regulator rather than the extent of house price gains,” she said.
“A soft touch approach from the regulator is likely in the first instance, followed by harder limits, most likely targeted at high debt-to income loans.”
Despite increasing house prices, the RBA is not budging on rates.
As the RBA announced its rate hold earlier this month, chatter among investors increased, with many predicting that given the property price boom, the bank could be forced to intervene earlier than planned.
“For inflation to be sustainably within the 2–3 per cent range, it is likely that wages growth will need to be sustainably above 3 per cent. This is assuming that Australia generates ongoing growth in labour productivity and that the profit share of national income does not continue to trend higher.
“Currently, wages growth is running at just 1.4 per cent, the lowest rate on record. Even before the pandemic, wages were increasing at a rate that was not consistent with the inflation target being achieved. Then the pandemic resulted in a further step-down. This step-down means that we are a long way from a world in which wages growth is running at 3 per cent plus,” Mr Lowe concluded.
About the author
About the author
Property
Is the house price ‘time bomb’ about to erupt?
Australia’s housing system is not working for the economy and an immediate overhaul is needed, a new report has alleged. The report calls into question the government’s current policy, which dicta...Read more
Property
Australia’s house prices rise, again
Australia’s house prices just went up again in a big way. ...Read more
Property
Family Home Guarantee under fire for narrow size and price caps
Questions surrounding the real value of the government’s new Family Home Guarantee scheme have surfaced, with data pointing to several issues with the scheme, including its apparent narrowness in te...Read more
Property
Construction dwindles as HomeBuilder ends
While detached dwelling construction continued to rise in April, the overall number of loans for new homes has fallen, official figures show. ...Read more
Property
When can we expect mortgage tightening?
While interest rates are said to remain low for an extended period of time, changes in the lending landscape are expected shortly, with the RBA itself announcing it is watching investors very closely....Read more
Property
The most affordable city for first home buyers isn’t what you’d expect
While Sydney remains the zenith of the Australian property boom, new research has revealed that it is in fact the most affordable capital city for first home buyers. ...Read more
Property
Australia’s most affordable and liveable suburbs revealed
The most affordable and liveable suburbs across four of Australia’s major cities have been revealed. ...Read more
Property
What the Victorian budget means for property owners
The Victorian government has used today’s budget to announce a raft of changes to the property market, with those at the top being asked to pay a little more. ...Read more
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Dissecting the budget and what it means for your equities, property and super
Listen now
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Property
Is the house price ‘time bomb’ about to erupt?
Australia’s housing system is not working for the economy and an immediate overhaul is needed, a new report has alleged. The report calls into question the government’s current policy, which dicta...Read more
Property
Australia’s house prices rise, again
Australia’s house prices just went up again in a big way. ...Read more
Property
Family Home Guarantee under fire for narrow size and price caps
Questions surrounding the real value of the government’s new Family Home Guarantee scheme have surfaced, with data pointing to several issues with the scheme, including its apparent narrowness in te...Read more
Property
Construction dwindles as HomeBuilder ends
While detached dwelling construction continued to rise in April, the overall number of loans for new homes has fallen, official figures show. ...Read more
Property
When can we expect mortgage tightening?
While interest rates are said to remain low for an extended period of time, changes in the lending landscape are expected shortly, with the RBA itself announcing it is watching investors very closely....Read more
Property
The most affordable city for first home buyers isn’t what you’d expect
While Sydney remains the zenith of the Australian property boom, new research has revealed that it is in fact the most affordable capital city for first home buyers. ...Read more
Property
Australia’s most affordable and liveable suburbs revealed
The most affordable and liveable suburbs across four of Australia’s major cities have been revealed. ...Read more
Property
What the Victorian budget means for property owners
The Victorian government has used today’s budget to announce a raft of changes to the property market, with those at the top being asked to pay a little more. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
