Westpac has lifted its forecast for growth in Sydney’s home prices by 5 percentage points to 27 per cent for this year, with the long lockdown doing little to dampen the powerful drivers of strong demand and low supply.
Sydney home values have already matched the bank’s previous forecast of 22 per cent and added about 1 per cent so far this month.
Westpac now expects Melbourne dwelling prices to rise by 18 per cent – 2 percentage points higher than its previous forecast.
Brisbane home values are poised to surge by 22 per cent, Perth by 15 per cent, Adelaide by 18 per cent and Hobart by 25 per cent.
In August, Westpac predicted Brisbane dwelling values to rise by 18 per cent, Perth by 12 per cent, Adelaide by 14 per cent and Hobart by 18 per cent.
Nationally, dwelling values are now set to jump by 22 per cent – 4 percentage points higher than the bank’s previous forecast.
“Australia’s housing markets are again outperforming expectations,” Westpac economists Bill Evans and Matthew Hassan wrote in a bulletin on Thursday.
“Prices have continued to post strong gains despite recent extended lockdowns in NSW, Victoria and the ACT. Even in the most heavily affected markets of Sydney, Melbourne and Canberra, price growth has sustained a strong double-digit annual pace.”
Since the start of the year, dwelling values had climbed by 17 per cent and were on track for a 1.5 per cent gain this month, the economists wrote.
“With reopening in sight, dampening effects of lockdowns will now drop out of the picture,” they wrote.
“We expect reopening boosts to more than offset any initial drags from recently announced macro-prudential measures.”
Westpac is forecasting the strong momentum in the housing market to carry into next year. However, it is expecting the rate of growth to flatten before moving into a correction phase in 2023.
“We still expect momentum to slow considerably through 2022 as stretched affordability combines with macro-prudential tightening measures and, later in the year, the anticipation that the Reserve Bank will begin a tightening cycle in early 2023 begins to weigh on confidence,” the economists wrote.
“The combination of high levels of new building and slow population-driven demand may also weigh on some sub-markets.”
Sydney dwelling prices are set to slow to 6 per cent next year, though 2 percentage points higher than the bank’s previous expectations.
Melbourne and Brisbane are forecast to grow by a slower 8 per cent and 10 per cent respectively.
Perth and Adelaide are poised to rise by 8 per cent each and Hobart by 6 per cent. Nationally, home prices are expected to grow by a smaller 8 per cent – 3 percentage points stronger than the bank’s previous forecast.
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/sydney-house-prices-to-rise-27pc-westpac-20211014-p5902a