Sydney home prices to surge 23pc this year

210 views 2021-08-26 13:31:46

ANZ has lifted its Sydney house price growth forecast by 4 percentage points to 23 per cent this year, after home values surged faster than expected in the recent months despite the city’s extended lockdown.

The bank is also expecting prices to continue rising over the next two years, albeit at a slower pace.

The lockdown has failed to dampen buyer demand, with investors returning to the market and auction clearance rates holding firm amid falling listings.

“Sales are at very high levels, while the stock on the market is very low, so I think that tightness in the market will see house price gains continue for the rest of this year,” said ANZ senior economist Felicity Emmett.

Melbourne house prices are now set to rise by 20 per cent in 2021, Brisbane by 21 per cent and Darwin not far behind at 19 per cent.

Canberra is set to outperform all capitals with 24 per cent growth expected this year, followed by Hobart at 23 per cent. Nationally, house prices are set to rise by 21 per cent.

In March, the bank predicted Sydney prices to rise by 19 per cent, Hobart by 18 per cent, Melbourne and Brisbane by 16 per cent, and Adelaide by 13 per cent. Nationwide, it expected house prices to rise by 17 per cent.

“The housing sector remains in very good shape and I think there’s quite a lot of resilience in the market,” Ms Emmett said.

“National house prices continue to rise strongly, even in Sydney where increasing levels of mobility restrictions have been in place since June responding to the rising number of delta COVID-19 cases.

“Interest servicing costs are much lower, savings buffers are much higher and household balance sheets are in a very good order, which I think are being reflected in the resilience in the market.”

ANZ is expecting house prices nationwide to rise by 7 per cent in 2022 and by a smaller 3 per cent in 2023 – a rosier forecast compared to Westpac, which is forecasting home values to rise by 5 per cent next year and drop by 5 per cent in 2023.

Sydney house prices in 2022 are set to rise by 6 per cent, Melbourne by 7 per cent, Brisbane by 8 per cent, Adelaide by 5 per cent, and Hobart, Darwin and Canberra by 6 per cent each.

By 2023, all capitals are predicted to post 3 per cent house price gains each.

“While the current momentum in prices suggests that growth in both 2021 and 2022 could outpace our forecasts, particularly if macro-prudential tightening is delayed, the increased uncertainty around delta and extended lockdowns pose some offsetting downside risk,” Ms Emmett said.

“I think there is a bit more uncertainty around when the economy will open up, how much damage will have been done – especially to small businesses and household incomes – and how much longer the fiscal support will go on. All those things do pose downside risks to the house price outlook.“

Ms Emmett said the worsening affordability would have a bigger negative impact on prices than the delta outbreak in the months ahead.

“I think that we are already seeing those affordability concerns start to bite,” she said.

“First home buyers are pulling out of the market, and they’re being replaced by investors. Clearly the price rises that we’ve seen, particularly through this year, I think, just make it really difficult for first home buyers.”

Since January, dwelling prices in Sydney had risen by 17.7 per cent, by 11.1 per cent in Melbourne, by 13 per cent in Brisbane and by 17.6 per cent in Hobart. Nationally, values had jumped by 14.1 per cent.

At the current house price levels, first-home buyers in Sydney would take 12.5 years to save a deposit, while it would take them 11 years in Melbourne and 9.5 years in Hobart.


This article is from Australian Financial Review, please click the following link for the original article:


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