Westpac’s Chief Economist, Bill Evans, has predicted an 18% rise in house prices, including a 22% rise in Sydney alone.
Speaking to AFR, Evans added that the growth would continue until regulators stepped in, which he said would more than likely occur in early 2022.
“Deteriorating affordability is likely to weigh on owner-occupier demand, and a tightening in macroprudential policy settings will restrain the supply of credit,” he said.
“We expect housing credit growth to exceed 7% by the first half of 2022, triggering a likely policy intervention. The precise response will depend on the composition of lending over the next year.”
This chimes with the general feeling of the rate market, which has seen rates gradually rise in response to a higher price of money, which should kick in as the new term funding period that began at the start of this month.
It is possible that other factors might come into play: the end of government subsidies would be a hammer blow to the First Home Buyer segment of the market, while it is also possible that regulations could come in to limit loan to value ratios.
“The upswing that emerged at the start of this year has continued to run ahead of expectations, with markets carrying strong momentum into the second half,” said Evans.
“Prices nationally rose 12.2% over the first six months, an extraordinary 25.6% pace in annualized terms.”
Evans was speaking as Westpac announced its July 2021 housing market update, curated with research firm CoreLogic.
In it, they called the last 12 months as the best in nearly 20 years in terms of house price growth.
“The housing market ended the financial year on a high note, with Australian dwelling values rising 1.9% over the month, taking housing values 13.5% higher over the year; the highest annual rate of growth since April 2004, when the early 2000’s housing boom was winding down after a period of exceptional growth,” read the report.