When will the boom stop? Westpac forecasting 20% house prices rises over the next two years – which would see Sydney values surge by $200,000
- Westpac is predicting 20 per cent property price rises over the next two years
- Australia’s second biggest bank forecasting 10 per cent rises in both 2021, 2022
Westpac is predicting a 20 per cent jump in Australian property prices during the next two years which would see Sydney house values surge by $200,000.
Australia’s second biggest bank said record-low interest rates of just 0.1 per cent would see capital city real estate values rise by 10 per cent in both 2021 and 2022.
A 20 per cent increase would see Sydney’s median house price surge by $207,000 during the next two years from an already expensive $1.034million to $1.24million.
The Reserve Bank cut interest rates to a record-low of 0.1 per cent in November and Governor Philip Lowe has repeatedly declared the cash rate will not increase until 2023.
Westpac economists Bill Evans and Matthew Hassan said all-time low interest rates and a strong recovery from last year’s Covid recession would turbocharge the housing market.
The Westpac bank is predicting a 20 per cent surge in Australian property prices during the next two years
‘The bottom line is that Australia’s housing upturn now has strong momentum that looks to be lifting further and will remain well supported by monetary conditions and an improving economic backdrop,’ they said.
Sydney and Brisbane house and apartment prices were expected to rise by 10 per cent in 2021 followed by another 10 per cent next year.
Perth was expected to do even better this year with property price increases of 12 per cent in 2021 before a more modest 8 per cent increase in 2022.
Melbourne’s median dwelling prices were expected to climb by a more subdued 8 per cent in 2021 followed by a 10 per cent increase next year.
A 20 per cent increase would see Sydney’s median house price surge by $207,000 during the next two years from an already expensive $1.034million to $1.24million. Sydney house and apartment prices (Toongabie home pictured) were expected to rise by 10 per cent in 2021 followed by another 10 per cent next year
Adelaide prices were tipped to grow by 10 per cent in 2021 and by 8 per cent in 2022 as Hobart’s equivalent values rose by 8 per cent this year and by 6 per cent next year.
Westpac is even more upbeat than the Commonwealth Bank, which last week forecast a 14 per cent increase in capital city housing values in 2021 and 2022.
As recently as September, Westpac was forecasting capital city property prices would rise by 4 per cent in 2021 and by 10 per cent in 2022.
Those upbeat but less buoyant predictions were made as Melbourne’s five million residents remained a strict, three-month lockdown.
With a vaccine rollout now underway, Westpac expected stronger economic growth and consumer confidence would underpin the housing market, especially in the bigger cities that last year had more Covid cases and restrictions.
‘Note that the vaccine developments will also influence the relative performance of different housing markets,’ Westpac said.
‘The smaller capital cities and regions are well placed to continue to outperform in 2021 but growth will swing towards the three eastern capitals – Sydney, Melbourne, and Brisbane in 2022 as the end of the pandemic allows international borders to reopen.’
Westpac, however, said a prolonged closure of Australian to tourists and international students could hurt property prices from 2023 as a halting of strong population growth created an oversupply of housing.
‘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,’ it said.
‘How that may influence market conditions and price growth is unclear.’