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

author-avatar By 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
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 28, 2021. 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 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.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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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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