ANZ expects house prices to rise by more than 20% this year, despite the lockdowns, based on a stronger-than-expected housing market.
According to the bank’s current projections, property values in Canberra are predicted to grow by 24% by the end of the year, and by 23% in Sydney and Hobart. Brisbane and Melbourne are predicted to see gains of 21% and 20%, respectively.
ANZ is the latest of the banks to raise its estimates amid the lockdowns, which, according to ANZ senior economist Felicity Emmett, are unlikely to disrupt the housing market’s momentum. Ms Emmett said, “We did think by this time of the year that the momentum in prices would have pulled back.”’
Instead, even in Sydney, which has been on lockdown for the past two months, prices have risen.
Ms Emmett said, “When you look at some of the leading indicators, auction clearance rates, sales to listing ratios, you can see the market is still very very tight and there hasn’t been much of a drop-off in demand or interest in the face of these quite heavy lockdowns,”
Ms Emmett noted that in Melbourne, where lockdown restrictions – which include a complete prohibition on home inspections – had had a greater impact on the clearance rate, prices were still holding up well.
She predicted that prices would hold up better than they did during the city’s protracted lockdown last year, when there was more uncertainty about the pandemic’s impact.
House prices in the big cities are anticipated to rise by more than 20% in 2021, up from forecasted rises of 15-20%, according to Ms Emmett, before rising by another 7% the following year.
Meanwhile, according to NAB’s latest projection released in July, house prices in the combined capitals will rise 18.5 percent in 2021 and 3.6 percent the following year, while Westpac predicts a rise of 18 percent this year and 5% in 2022.
According to CBA’s projections, Sydney would see the greatest price increase, with a 24 percent increase projected in 2021. Mr. Aird predicted that the market would be mainly impacted by the shutdown, noting that momentum was still strong, with buyers and sellers feeling more confidence today than in the early phases of the pandemic.
While the market’s pace would decelerate in 2022 due to affordability concerns, increasing interest rates in the years ahead would be the real game-changer.
Ms Emmett also flagged interest rates as the main driver of the property market’s strength, but noted declining affordability was already weighing on buyer demand.