PHOTO: Economists say house prices will surge by 22% in 2021, but predict prices will rise by only 8% next year and then decline by 8% in 2023. Photograph: Glenn Hunt/AAP
Westpac upgrades 2021 forecast, with the biggest gains expected in Sydney, up 27%, spurred on by low interest rates during the pandemic
House prices will have surged by 22% by the end of the year but economists can see a gradual easing on the way.
Westpac economists have upgraded their forecast for price growth in 2021 from 18 to 22% after lockdowns in some states had only a modest effect.
Low interest rates during the pandemic had been seized on by property hunters.
Prospective buyers will be glad to learn the pace of the increases is not tipped to last.
The Westpac economists predict prices will rise by only 8% next year.
This was in part due to an Australian Prudential Regulation Authority decision last week, when the banking watchdog told banks it wants new borrowers’ ability to meet loan repayments assessed at an interest rate of at least three percentage points above the loan rate they are applying for.
The Westpac economists said they expected this to be the first of a number of measures to restrain credit and the housing market.
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