National house prices will surge by a massive 20pc this year, another 7pc in 2022: CBA
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Sydneysiders were in lockdown throughout August, but that didn’t stop property prices in Australia’s largest city from posting another strong monthly gain.
Looking ahead, CBA economist Gareth Aird maintained his recent forecast that property values will be “largely divorced from economic outcomes” in the second half of this year.
The 1.8% rise for Sydney was in line with steady increases across Australia’s other capital cities, based on the latest figures from CoreLogic.
Leading the pack (again) was Hobart where house prices gained another 2.3%.
There were steady gains elsewhere although prices in Darwin hit the brakes with a -0.1% drop, while CoreLogic needs to run the stats back in Perth because the numbers looked a bit off.
Aird noted that CBA “commented last month that soft Perth outcomes over the past year looked odd, given the outperformance of the WA economy”.
While noting that turnover has declined while Australia’s two largest property markets — Sydney and Melbourne — face lockdown disruptions, Aird isn’t concerned that mobility limitations will lag on the post-COVID juggernaut that is Australia’s property market.
More broadly, CBA reckons national dwelling prices will surge by a massive 20% this year.
“We expect home prices to keep rising over the remainder of the year, despite the large negative shock the economy is going through,” Aird said.
And even though it’s copping the brunt of the latest Delta outbreak, Aird thinks annual gains will be driven by the Sydney market — largely on the strength its huge rally prior to lockdowns.
Looking further out, CBA expects things to dial back a bit in 2022. However, it’s not as if things are going into reverse any time soon.
CBA’s forecast is for 7% annual growth next year, as affordability constraints begin to flow through in the wake of 2021’s parabolic rise.
In light of the disruption to economic growth caused by Sydney and Melbourne lockdowns, CBA recently extended its timeframe for the first round of RBA rate increases — from November 2022 to May 2023.
And while house price growth may moderate next year, “very low mortgage rates will continue to be a tailwind on the property market”, Aird said.