JobKeeper extension would see house prices spike higher in 2021

author-avatar By on December 03, 2020
JobKeeper extension would see house prices spike higher in 2021

Aggressive government stimulus is essential to recovery in the housing market next year, according to SQM Research.

The 'Christopher's Housing Boom and Bust Report 2021' outlined its scenarios for the property market next year, with house prices to spike higher should JobKeeper be extended past its planned March end date. 

A best-case scenario would see the cash rate unchanged, an expansion of the Reserve Bank's quantitative easing (QE) program, containment of a third COVID wave and a vaccine roll-out, as well as a JobKeeper extension. 

Capital city house prices would rise 5-9% in this scenario, with Perth the stand-out performer, followed closely by Sydney and Adelaide. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 19, 2021. View disclaimer.

SQM's analysis found an extension of JobKeeper was essential to the ongoing momentum of the housing recovery, as without it, Sydney and Melbourne's market could stall. 

In fact, the research found JobKeeper ending, and JobSeeker returning to its base rate, would be worse for house prices than if no vaccine was released next year, borders remained closed, and there was a negative cash rate. 

The latest figures from CoreLogic found house prices had risen for the second consecutive month in November, after dipping 2.1% between April and September.

SQM house price forecasts 2021 

sqmhps20210

Managing Director of SQM Research Louis Christopher said the national housing market had responded to unprecedented economic stimulus as well as the record low cash rate. 

"Auction clearance rates have lifted since mid-year and various dwelling price measurements have started to record price rises," Mr Christoper said.

"It is likely that the housing market will gain further momentum on the back of increased investor activity, especially from those who seek some sort of income yield." 

SQM said the proposed axing of stamp duty would be stimulatory in Sydney, while inner city-units would continue to record price falls. 

Melbourne's lockdown is likely to subdue the housing market recovery, but rate cuts and State and Federal government stimulus would put a floor underneath the market for houses. 

A significant shortage of Perth rental properties is likely to translate into even faster rent increases and buyer activity next year. 

Too big to fail? 

Mr Christopher said he had misgivings on the longer-term consequences of JobKeeper, despite advocating for its extension.

"If housing is regarded as an asset class that is not allowed to fall, Australia could have some rather serious social issues surrounding home ownership rates over the long term," he said.

"In the meantime, risks have risen that this new recovery will be one of the more speculative rises seen in some time.

"Let’s keep in mind unemployment remains elevated and net migration is expected to be negative next year. We have a surplus of inner-city units in our two largest cities.

"And if there was another negative macro event in 2021, there is not much room left to cut lending rates further."

He added he worried there was sentiment creeping in that the government would never let the housing market fall. 

“Many in the community are starting to think they cannot ever lose on housing. That the Government will always be there to step into the housing market, if need be.

"And that is a scary idea...”


Photo by Lochlainn Riordan on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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