Sydney and Melbourne house prices to rise 8-12% in 2021

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on November 30, 2020
Sydney and Melbourne house prices to rise 8-12% in 2021

Photo by Paula-Jorunn Naes on Unsplash

Sydney and Melbourne's property markets are set for strong growth next year, according to new analysis.

Buyer's agent platform BuyersBuyers.com.au forecasts the two capitals will see house prices rise 8-12%, while Brisbane and South East Queensland will also see solid growth of 6-10%. 

Perth, Adelaide, and Canberra will also see growth of around 4-8%.

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

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • 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%
UNLIMITED REDRAWSSPECIAL 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%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • 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
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

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. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. 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 May 18, 2022. View disclaimer.

Chief operating officer of BuyersBuyers.com.au Pete Wargent said the housing market landscape had shifted quickly over the past three months. 

"We expect to see a strong 2021 for housing, with more and more investors coming back into the market’ Mr Wargent said.

"With investment loans now available in the 2% to 3% range, comparatively speaking yields are now looking more attractive in many areas, and the investors are returning.

"Some markets, such as houses in Brisbane, are noticeably picking up."

BuyersBuyers.com.au said relaxed responsible lending laws, coupled with interest rates that were making it cheaper to rent than buy in some cases, would result in increased demand for detached houses. 

Sydney and Melbourne's house price spike is set to be driven by a low availability of stock of quality assets and increased demand, already being evidenced by increasingly robust auction clearance rates. 

Doron Peleg, chief executive of RiskWise Property Research, said the forecasts reflected the improved market conditions, stimulatory settings, and the successful containment of COVID-19 in Australia.

"While some risk areas of the market remain, especially in some of the oversupplied unit segments of the market, overall, 2021 is set to be a strong year of capital growth in Australian property," Mr Peleg said.

Areas in New South Wales attracting lifestyle buyers include Byron Bay, the Central Coast (North Avoca, Terrigal, and Wamberal), the Hunter Valley, Wollongong, and the NSW South Coast. 

Victoria's elimination of COVD has meant the housing market has shifted from a buyer's market to a seller's one. 

Three months ago, home buyers in Melbourne were in a solid position to leverage market conditions, with very low volumes and low auction clearance rates.

This is no longer the case though, with a sharp increase in buyer sentiment and auction clearance rates.

In both capitals, unit markets remain a much higher risk than their housing counterparts, with a number of oversupplied suburbs. 

Meanwhile, the Queensland housing market, particularly houses in Brisbane, the Sunshine Coast, and the Gold Coast, are set for strong growth, after prices held up well through COVID. 

Sentiment improving sharply 

According to the Westpac-Melbourne Institute, housing market sentiment surged in September and October, along with a sharp increase in Westpac's House Price Expectations index, which lifted in September and October by 21.7% and 31.5%, respectively. 

BuyersBuyers.com.au said although this index was still 6.5% below the average level in the six months prior to the pandemic, it was highly likely the index will rise materially in the next six months. 

"Clearance rates across the country are likely to remain high and similar to pre-pandemic levels," it said.

"With improved consumer confidence and auction clearance rates it is likely that while volumes will materially increase in 2021, auction clearance rates will remain high, above the 70% mark."

ANZ forecasted earlier in November national house prices were set to rise by 9% in 2021, but tipped Perth as the top performer, with a 12% spike, while Melbourne would lag behind the other capitals, with growth of 7.8%. 


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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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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