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. 

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
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6.14% p.a.
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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *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. Rates correct as of . 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



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