The CBA is forecasting a surge in house prices over the next two years of up to 16 per cent, while unit price-growth will be more muted at 9 per cent.
According to the CBA, lending rates have lifted sharply, signalling a housing market on the “cusp of a boom”.
“The increase in new lending is now feeding into higher prices for bricks and mortar.” CBA economist Gareth Aird said.
“The negative impact that Covid-19 had on Australian property prices turned out to be much more muted than almost any forecaster expected, us included.
“We were earlier than most, however, to recognise this and revised our call in September 2020 to look for a smaller peak-to-trough fall and a decent lift in prices over 2021.
“But even then, the rapid growth in new lending over the second half of 2020 was stronger than we anticipated.”
Capital city forecasts
| % change to Dec 2021 | % change to Dec 2022 | 2 year % change to Dec 2022 | |
|---|---|---|---|
| Sydney | 7.5 | 5.8 | 13.7 |
| Melbourne | 7 | 5 | 12.4 |
| Brisbane | 9.5 | 6.5 | 16.6 |
| Adelaide | 9 | 5.5 | 15 |
| Perth | 10 | 7 | 17.7 |
| Hobart | 9 | 6 | 15.5 |
| Darwin | 12 | 6 | 18.7 |
| Canberra | 9 | 6 | 15.5 |
| 8 capital cities | 8 | 6 | 14.4 |
^Source: CBA
In its most recent economic issues report, economists at the CBA reported the boom was off the back of record low interest rates and a v-shaped labour market recovery.
The CBA is reporting positive momentum is building within the property market and “as the market firms, would-be buyers are more confident to purchase and this brings other buyers into the market.”
The news is less positive for unit-owners. CBA is forecasting a disparity in price growth between houses and apartments.
“We forecast national house prices to rise by 16 per cent over the next two years and unit prices to rise by 9 per cent,” Aird said.
Source: CBA Tips 16pc House Price Growth, Taryn Paris, The Urban Developer