Australian House Prices See Strong Growth

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Posted on August 5, 2021 by Mirren Property Investment

Australian house prices have soared at an unbelievable rate across all major cities. Thanks to the strong demand, low interest rates, and government incentives, this momentum could very well go until next year.

Based on a recent report from ANZ Bank, the national level Australian house price rose to a substantial 17% through 2021. According to the same report, this will slow down to 6% growth by 2022. The following are some of their major predictions.

Sydney and Perth house prices will increase by 19% by the end of the year.
Melbourne, Canberra, Darwin, and Brisbane house prices will soar by over 16% this year.
Adelaide house prices will rise 13% over the year.

Dramatic House Price Growth Across States

Sydney house prices are now at $1,309,195; according to Domain records, this is the fastest quarterly acceleration since 1993. If things continue the way they are, an average house in Sydney will cost around $1.24 million by 2023! Other capital cities have also seen significant upswings during the quarter.

Melbourne saw a 4.8% increase. For Melbourne, this is its first time rising than regional Victoria. Melbourne is also the only capital city to record a new unit price high. Brisbane house prices are also at a record high. However, their units have not done so well. If you want to buy a house in Brisbane this year, you will need about $60,000 to secure a house.

Perth house prices have also reached their peak in over five years. Their unit prices were also the highest in almost three years. As for Hobart, house prices hit a new record high for the first time since 2017.

More Optimistic Forecasts

Property price growth will also soar, according to the Commonwealth Bank. Based on their recent forecast, property price growth will climb two points from 8 to per cent this year. Westpac is a lot more optimistic; they forecast 10 per cent house growth for this year and even next year.

We have seen how house prices increased 22% during the final months of 2020, which signifies a confident housing market. Australia’s unemployment rate is also forecast to decline steadily by the end of 2021, and it would go even lower by the end of 2022.

Previously, treasury secretary Steven Kennedy has forecasted a 10% rate of unemployment. However, by July 2020, the unemployment rate only grew by 0.1% to 7.5%. Things weren’t as bad as previously forecasted.

Furthermore, the strong demand for houses keeps the number of properties on the market low, which also makes vendor discounts at a record low. The auction clearance rates have remained below 80%, which indicates a strong property market. Also, the Australian economic recovery is as good as it gets in the March quarter, increasing 1.8%. It proves to everyone that 2021 is indeed a year of recovery after the challenging year of 2020 ended, which has surprised many economists who had more pessimistic predictions during the start of the year.

According to CoreLogic’s head of research, Eliza Owen, several factors drove this increase in the housing market during the first few months of 2021. But it’s all majorly affected by the continued Covid response, such as continued low mortgage rates, high consumer confidence, and for some, savings due to COVID restrictions.

The federal government incentives such as the first home loan deposit scheme and the new home guarantee have contributed significantly. Due to these schemes, many aspiring home buyers have entered the property market earlier on average.

Australian Government’s stimulus and efforts have fuelled the strong housing market growth. Australia’s economy seems stronger than expected, and there’s a great chance that this will continue for years.

How It Will End?

The boom will not last forever, and economists predict that it will slow down by 2022. According to Melissa Heagney, senior journalist for Domain, economists predicted slow growth by the end of the year due to “affordability pressures bite, and more homes being offered for sale”. On a different note, some experts also say that house prices can fall only during 2023; this can happen if the Reserve Bank of Australia decides to raise the interest rate a year earlier.

Despite all the grim predictions, the Australian housing market has bounced back to heights never imagined. More predictions say that prices will continue to rise, which is a good sign for investors.

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Australian House Prices See Strong Growth