As values across well-selected markets in Australia continue to climb, the question on home-owners and investors minds is "will the housing boom continue at the same rate or will it reverse?".
This article will provide clarity for the future of the property market, drawing on key predictions from leading property economists.
What The Economists Are Predicting.
Many economists believed that the rapid pace of Australian house price growth was set to slow by the end of 2021, due to taking into account increased affordability pressures, emphasised by the impact of COVID-19 in certain states, causing more homes to be offered for decreasing demand across the country, due to oversupply in key suburbs.
However, the opposite has been the case, with record low-interest rates, government grants and more spacious homes being in demand due to the need to work from home. This has caused a revision by bank economists for their 2021 forecasts after housing values have soared at a faster pace than anticipated.
The current forecasts for each state by the 4 major banks in 2021:
Sydney house prices increasing by up to 19% in 2021;
Melbourne house prices rising by over 16% in 2021;
Brisbane house prices rising by 16% in 2021;
Adelaide house prices rising by over 13% in 2021;
Perth house prices rising by over 19% in 2021;
Canberra house prices rising by over 16% in 2021;
Darwin house prices rising by over 16% in 2021.
A key factor for the revision of forecasts was after CoreLogic figures outlined that dwelling values across the nation increased by 10.6% over 12 months (May 2020-May 2021), and that dwelling values rose by 2.2% in just one month (May 2021) .
The RBA has also stated that residential property markets around Australia have continued to strengthen, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, including first-home buyers. There has also been increased borrowing by investors.
Given the environment of rising housing prices and low-interest rates, the Reserve Bank will be monitoring trends in housing borrowing carefully, and lending standards must be maintained .
A Past Property Boom Example.
A great case study to display the widespread growth nationally, and where suburbs are experiencing increased buyer interest is within the Brisbane property market.
Place Advisory’s latest quarterly report has revealed the largest sales volumes recorded in Brisbane since 2017. 7,900 sales were made over 6 months (October 2020- March 2021), 7% higher than the entire five-year average.
It was Brisbane’s inner-ring that saw the most dramatic increase in volume, recording a remarkable 1,330 sales over the same period, 20% higher than the five-year average and 29% higher than 12 months earlier .
_______ The Next Steps
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Follow us on LinkedIn Disclaimer: When considering purchasing a property, it's always prudent to seek the advice of an appropriately qualified professional to determine which strategy is most appropriate for your individual circumstance. References  Domain Group  RBA
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