The housing market in Australia has experienced a bumpy ride over the past year, as have most industries dealing with the fallout from the coronavirus pandemic. However, data from September 2020 suggests a strong recovery in 2021. The economics team of Westpac has forecast house prices bottoming out at a fall of 2.3% by June 2021, compared to earlier predictions of a 10% slump over the same time period.
Between June 2021 and the middle of 2023, experts are now expecting a national average rise of 7.5% per year, or 15% in total. These gains will be led by certain areas including Perth and Brisbane, while some major cities including Melbourne are expected to decline further than average over the coming months.
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Information shared in January 2021 showed that some regions of Australia were already experiencing a boom in house prices. The median house price for Sydney reached $1.2 million and Melbourne also reached record highs. This is despite the recession triggered by the response to COVID-19 and the fact that many urban professionals have chosen to relocate to more affordable coastal areas.
Six out of eight capital city markets in Australia reached record highs for house prices in December 2020. While Perth and Darwin did not break any records, house prices still rose in both cities. With more professionals working from home, there has been an exodus towards coastal properties with scenic locations. The knock-on effect of this is that house prices in these typically more affordable areas are also on the rise as demand increases and stock levels remain low.
An interest rate cut in November 2020 has been partially responsible for increased demand across the Australian housing market, with rates cut to an all-time low of 0.1% for cash rate. This helped to drive demand, with access to cheaper credit making mortgage payments for more expensive properties more affordable to many.
Experts from Westpac have stated that the sustained low rates will push up average house prices from shore to shore, coupled with fiscal support from state and federal governments and ongoing regulatory support.