Australian home prices are projected to rise the most sharply since the 1980s

People looking to buy a home for the first time are shocked as new reports from leading economists show the dire outlook for the year.

The disastrous news for Australians trying to step into the real estate market ladder is that home prices have skyrocketed 17% across the capital this year, marking the fastest pace of growth since the late 1980s.

ANZ economists warn in a new report that home prices in Sydney and Perth are projected to rise by double digits in 2021.

With median home prices already close to $ 1.1 million, Sydney is experiencing the largest year-long price increase since 2015. This is a significant increase of 19%.

House prices in Perth are also on the rise this year by 19%, followed by Hobart (18%), Melbourne and Brisbane (16%) and Adelaide (13%).

ANZ previously predicted a 9% rise nationwide this year, but many factors are pushing it up significantly.

The real estate market has record low interest rates for buyers, very low levels of immigration, government programs, and Coronavirus recession.

“The impact of low interest rates on the housing market is more than offsetting the headwinds of rising unemployment and very low population growth,” the researchers said.

“The combination of strong supply and low supply is causing prices to skyrocket.

“Housing construction is also recovering sharply, supported by the federal HomeBuilder scheme, the support of other governments, and low interest rates. There is now a significant pipeline of activity, with double-digit growth in 2021. Expected. “

But they say there may be some amnesty for the soaring prices next year.

Banking regulators could intervene later this year to limit borrowers from assuming too much debt compared to their income, which could slow price increases in 2022.

Relation: $ 135,000 Savings Don’t Buy In The “Worst” Suburbs

An average increase of 6% is expected across Melbourne and Sydney, and an increase of approximately 8% is expected in Perth and Brisbane.

But that rate is three times higher than expected inflation, and this year’s inflation alone could be a major barrier to those trying to step into the door.

House prices soared nationwide during the real estate boom of the late 1980s, ending with double-digit interest rates and the 1990-91 recession.

According to data separate from CoreLogic, the percentage of properties that made a profit and changed hands in the December quarter rose to 89.9%, above pre-pandemic levels, but unit owners lost more than home vendors. Tend to sell.

It shows that only 4.4% of Sydney homes were sold at a loss, compared to 12.6% of Sydney homes.

In Melbourne, 2.5% of homes were lost and sold, while 13.5% of units lost.

In some parts of the big cities, Melbourne’s CBD sales were 31.3% of total sales and Stonington’s 21.9%, showing high levels of deficit sales. In some parts of Sydney, such as Botany Bay, Strathfield and Parramatta, the share of lost sales was over 17%.

Relation: Impact of population decline on home prices

Eliza Owen, Head of Research at CoreLogic, said real estate value increased and profit value increased significantly in each state and territory throughout the December quarter.

She said gross profit from resale in the December quarter increased from $ 24.8 billion in the previous quarter to $ 31.9 billion, and total resale losses also fell from $ 1.2 billion to $ 1 billion in the September-December quarter. Said.

“The results are particularly important given the three-month increase in sales volume through December, much of which is due to increased trading activity across Melbourne,” Owen said.

“The economy has recovered from the weaknesses of the long-term blockade, resulting in a significant increase in sales and listings throughout the city.”

Soaring price forecasts are good news for those who already own a home, but are they a sign that the market is starting to bubble?

The federal government doesn’t think so. Luke Yeman, deputy secretary of the Treasury, said yesterday that the Senate had estimated that the ministry was watching the real estate market closely, but that there were no signs of a bubble or a decline in lending standards.

He said lower interest rates over the past year mean that affordable housing prices are in line with overall levels over the last five years.

He said rising house prices were actually pushing up the economy as a whole.

“At this stage … from the support provided by the strong housing market to consumers to household wealth, we see it as a sign of the strength of recovery,” he said.

Australian home prices are projected to rise the most sharply since the 1980s

Source link Australian home prices are projected to rise the most sharply since the 1980s

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