The National Australia Bank has this week joined the chorus of other major financial institutions revising their previously grim property growth forecast. The revised forecast sheds a much more positive light on the Australian housing market over the next two years. NAB has cited an average growth of around 5% for national housing prices with the biggest gains predicted in the capitals of Brisbane, Adelaide and Hobart markets.
NAB predicts just over 7% growth for these capital cities in the next two years. Driving demand and buyer confidence is the huge investment of local government infrastructure, associated jobs growth and the relative affordability of property relative to Sydney and Melbourne.
The news is also positive for Sydney and Melbourne with the NAB predicting healthy gains of around 4.5% and 3.5% respectively. (source)
These gains have far exceeded expectations from the beginning of the pandemic in late March-early April when forecasts were expecting dramatic drops of between 5% - 15% in the major capital cities.
Signs of recovery are already apparent. According to Corelogic, property prices have continued trending up since July and rose another .2% in October. Continued growth, in both regional Australia and the capital cities, is expected now and into the foreseeable future.
The RBA’s further lowering of interest rates earlier this month is expected to fuel this growth even further. Historically cuts to interest rates have fuelled housing market activity and generally aligned with an uptick in dwelling prices. (source).
Coupled with further stimulus announced in the federal budget, tax cuts and continued state government incentives such as stamp duty cuts and various housing and building grants are expected to balance out the winding back of JobKeeper and the expiry of home loan repayment deferrals. (source)
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