Experts Predict Another Australian Property Boom
Published 5:16 am 12 Nov 2021
Things are about to get even hotter in Australia’s record-breaking property market.
If the growth seen over 20-21 in Australia’s property market wasn’t enough, experts are now predicting that property prices will continue to grow throughout the rest of the year and into 2022.
According to Finder’s Cash Rate survey, nearly 40 experts and economists expect Melbourne property prices to climb by 9 percent – a $74,800 increase over the year.
Sydney home prices could climb by 8 percent, the experts predicted, pushing the median value of Sydney properties up to $1.37 million by the end of next year, and Brisbane homes are expected to cost roughly $50,000 more over that same period.
According to Graham Cooke, the head of consumer research at Finder, the resumption of international travel in Australia will help to propel the property market even further.
“The opening of international borders, and the return of potential overseas investors may well re-fuel the market” said Cooke.
“Sydney homeowners stand to make an eye-watering 3.5 times the average household salary of $97,211 just on their property,” he explained, speaking of the predicted increases in home values between 2021 and 2022.
“Melburnians are a distant second, with the average homeowner merely making 1.6 times the average salary.”
These sentiments echo that of Westpac’s Chief Economist Bill Evans, who predicts that the property market’s “strong momentum” will continue throughout 2022.
The Westpac Chief went on to say that the bank “expect[s] price growth to slow to 8 per cent in 2022, up from our previous forecast of 5 per cent, with most of that increase loaded into the first half of the year.
This is great news for homeowners, but not such great news for those looking to break into the property market, says Cooke.
“The home ownership dream is clearly still alive, but housing affordability is making the dream more difficult to come true.”
In fact, the worsening housing affordability is one of the main headwinds for Australia’s property market, says CoreLogic’s research director, Tim Lawless.
“Housing prices continue to outpace wages by a ratio of about 12:1. This is one of the reasons why first home buyers are becoming a progressively smaller component of housing demand,” said Lawless.
Over the past twelve months, Australia’s property values have climbed 21.6%, the fastest pace of growth seen since 1989.
Now, the Australian residential property market outstrips ASX-listed stocks, commercial real estate and super funds combined, sitting at a whopping $9.3 trillion.
Price divide widens between houses and units
As the property market continues to soar across the country, houses are leading the charge, with a record-high gap between house and unit prices of 34.4%.
For example, in Sydney, house values climbed 30.4% over the past twelve months, while unit values rose by 13.6%. In Melbourne, house values rose 19.5% while unit values rose by 9.2%.
Speaking on the growing chasm in price values between houses and units, CoreLogic’s head of research, Eliza Owen, said:
“Looking at the change in unit values as a portion of housing over time, it shows apartment owners in the current market would be able to put less towards a house than they could five years ago.”
CoreLogic’s Tim Lawless also spoke on the subject, stating that the growing unaffordability of houses across the country may push people toward higher density living such as urban apartments – areas that previously lost residents during the coronavirus pandemic.
“As housing becomes less affordable, we expect to see more demand deflected towards the higher density sectors of the market, especially in Sydney where the gap between the median house and unit value is now close to $500,000,” Mr Lawless said.
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