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.

Advertisement

Smart Booster Home Loan Discounted Variable - 2yr

Product Features

• 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%

Monthly repayments:$1,499

2.10%Advertised Rate (p.a.)

2.46%Comparison Rate*

More details

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.

Latest Articles

• Wages growth hits 2.4%, will the RBA raise the cash rate in June? May 18, 2022
• What is shrinkflation? May 18, 2022
• AMP Bank combines with Nano to offer fully-digital home loan process May 18, 2022
• Which lenders offer 95% LVR home loans? May 18, 2022
• New CommBank-supported app Kit aims to help parents and kids break down money 'taboos' May 17, 2022