Australia’s second biggest bank has predicted a 20 per cent jump in Australian property prices between now and 2023, which would see the value of homes in Sydney surge by $200,000.
Westpac said record-low interest rates of just 0.1 per cent would see real estate values in our nation’s capital cities rise by 10 per cent both this year and next.
In Sydney, that 20 per cent increase two years’ from now would see the media house price jump by at roughly $207,000 – from $1.034 million to a whopping $1.24 million.
“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,” Westpac economists Bill Evans and Matthew Hassan said.
A strong recovery from last year’s COVID-19 recession and Australia’s vaccine rollout – which began today – have also played a positive hand in matters.
“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.”
Sydney: 10 per cent (2021) + 10 per cent (2022) = increase of $207,000.
Melbourne: 8 per cent (2021) + 10 per cent (2022) = increase of $147,943.
Brisbane: 10 per cent (2021) + 10 per cent (2022) = increase of $116,780.
Adelaide: 10 per cent (2021) + 8 per cent (2022) = increase of $91,796.
Hobart: 8 per cent (2021) + 6 per cent (2022) = increase of $78,685.
Perth: 12 per cent (2021) + 8 per cent (2022) = $101,217.
Economist Saul Eslake told The Sydney Morning Herald last month that recent gains in the housing boon are unlikely to be undone.
“I would say the rise in house prices is probably sustainable,” he said.
“Indeed, we could see further gains in many regional cities as people adapt to the opportunities created by the more widespread acceptance – at least for white-collar occupations – of working from home.
“Much of the demand is coming from first-time buyers, who appear to perceive an opportunity to get into the housing market without facing the competition from cashed-up immigrants or negatively geared domestic investors, which has ‘squeezed’ them out for most of the preceding 30 years.”
Prolonged border closures, however, could hurt house prices from 2023, Westpac warned.
“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,” the bank said.
“How that may influence market conditions and price growth is unclear.”