House prices 2021: The five capital cities set for "double-digit" house price growth

Five of Australia's eight capital cities are on track to record double-digit house price growth in 2021 according to Propertyology.

The national buyer's agency and property research firm believes low interest rates, improved availability of credit and low housing supply will be the "rising tide to lift all ships".

Propertyology predicts house prices will rise by 15% in Perth, Canberra, Adelaide and Hobart, while rising by between 10-15% in Brisbane, and between 5-10% in Darwin and Sydney.

Meanwhile, more than 40 regional locations are on track to record 20% capital growth in 2021, supporting anecdotal evidence of a regional property boom.

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“The widespread property boom that we are predicting is consistent with Propertyology’s commentary throughout the last 12-months," said Propertyology Head of Research Simon Pressley.

"In addition to always disagreeing with the forecasts of doom, Propertyology is the only firm in Australia that has maintained a boom forecast throughout the unprecedented year that 2020 was,” said Mr Pressley.

Mr Pressley listed three caveats for 2021 predictions: a) an individual location experiences nothing more severe than a 1-month Stage 3 lockdown during 2021, b) that residents are permitted to cross state borders, and c) that it doesn’t become any harder for responsible borrowers to acquire credit.

If all goes well, Perth could be on track to record 20% price growth this year, according to Propertyology.

"Perth has potential to be Australia’s best performed capital city property market over the next couple of years, and 20 percent growth in 2021 is not out of the question," Mr Pressley said.

"That said, Propertyology has made a conscious decision to avoid this market because of risks associated with its distinct lack of economic diversity and unhealthy reliance on China for circa 50 percent of the state’s income."

The outlook isn't as rosy for Melbourne; the property research firm forecasts less than 5% capital growth.

"Whilst rising tides generally lift all ships, I am very concerned about what impact the 113-day hard lockdown might have on Melbourne's property market," Mr Pressley said.

"It is highly likely that Melbourne apartment values will remain under water for some years."

Despite this, Mr Pressley said overall property market conditions are very strong.

“All things being equal, Australia has just commenced an era of accelerated rates of home ownership and wealth creation, in a manner not seen since the 5-years ending 2005."

Rental crisis to unfold in 2021

Mr Pressley believes the biggest real estate story of 2021 will be sharply rising rents and extreme difficulties finding a property to rent.

“While rental conditions are soft in Sydney and Melbourne, the biggest ever rental boom in living memory is already unfolding across the rest of Australia," he said.

"It is a fact that Australia had a national shortage of shelter available for sale and for rent immediately before COVID-19. A germ is not capable of creating more shelter.”

See also: What's in store for struggling renters in 2021? (In-depth)

The buyer's agency found that even before COVID, Australia already had a massive undersupply of rental housing, with five out of eight capital cities seeing vacancy rates below 1%.

"The reality is that Australia does not have enough housing supply for its existing 25.6 million population," Mr Pressley said in December.

"Propertyology is predicting that these next couple of years will produce the biggest increase in rents that Australia has seen in living memory.

"To secure a standard rental property over the next couple of years, it will not be uncommon for households to need to find an extra $2,000 to $5,000 per annum."

Photo by David Gilbertson on Unsplash