Australia’s house price recovery, which began in Sydney and Melbourne, has expanded to most of the capital cities bolstered by improved access to credit and record low interest rates, according to a new report.
The latest ANZ housing report shows house prices continue to record a solid rise, revising up its forecasts, the bank expects Australia’s housing prices could rise 8 per cent on average through 2020, and 4 per cent in 2021.
The report notes the combination of pent-up demand and low volumes as “a key driver of the larger than- expected rebound”.
As Australia's housing market continues is recovery, NAB’s residential property index, released Friday, climbed to its highest level in nearly six years.
NAB expects overall dwelling price rises by 4 per cent this year, and ease to around 2.5 per cent in 2021, with forecasts Sydney and Melbourne dwelling price growth will slow.
“Outcomes for the other capitals are likely to be more mixed, driven by state specific factors,” the NAB report notes.
But while ANZ has nudged up its house price forecasts, it also notes the pace of gains are expected to slow.
“Nationwide, we expect prices to rise solidly in 2020, but we think the pace of monthly gains will moderate, helped by rising new listings,” ANZ senior economist Felicity Emmett said.
“This already seems the case, with December prices slowing to 1.4 per cent month-on-month from 1.9 per cent month-on-month in November.”
Emmett said daily house price data suggests the slowdown has continued into January.
“We now expect housing price growth for Sydney and Melbourne to peak in mid-2020 in the low double digits.
“Through 2020, we look for growth of 8 per cent nationwide, with a further gain of 4 per cent through 2021. The risks seem tilted to the upside, alongside the risks for further monetary easing.”
House prices in Sydney and Melbourne have now risen 9 per cent since last year's low in May.
The ANZ report notes that Melbourne and Brisbane prices are “close to reclaiming earlier peaks”.
“Melbourne prices are only just off their peak and look set to regain that peak in the next couple of months,” Emmett said.
Adelaide prices are now also picking up, while Perth prices are stabilising after falling more than 20 per cent since its 2014 peak.
Hobart recorded strengthening prices amid while its pace of growth slowed.
In December last year, prices increased in all capital cities except Darwin and Perth, where they remained flat.
Corelogic data, released earlier this month, showed that housing prices for the December quarter made the largest increase in 10 years, with a 4 per cent increase, the fastest gain since November 2009.