PHOTO: Australia’s housing market has gathered strength as the economy recovered, with February recording the biggest monthly price gain in 17 years. Photographer: Brent Lewin/Bloomberg
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Property-price gains set to cool to 5% in 2022 and 3% in 2023
- Housing could add +1 percentage point to GDP in coming years
Australian house prices will advance 10% this year, fueled by low interest rates and improved sentiment, but there are risks ahead including a potentially more hawkish Reserve Bank, Goldman Sachs Group Inc. said.
The outlook for residential construction and turnover has also strengthened in recent months, Goldman said in a research note released Friday. Combined with positive wealth effects, it estimates the housing industry’s “overall impulse to annual GDP will be around +1 percentage point” over the next few years.
“This outlook assumes that immigration normalizes to pre-Covid levels in 2022 and the RBA does not hike the cash rate until 2H2024,” wrote Andrew Boak, Goldman’s chief economist for Australia. “More prolonged border restrictions or an earlier-than-expected tightening in monetary policy pose downside risks.”
Further out, Goldman sees house prices rising 5% in 2022 and 3% in 2023.
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