A strong back half of 2019 is tipped to continue in 2020 and 2021, which will see Melbourne join Sydney in the million-dollar club, according to an industry report.
According to property group Domain, Melbourne’s housing market will grow by 8 per cent in 2020 before growing by 3 to 5 per cent in 2021.
This will mean Melbourne’s median house price reaches around $970,000 by the end of this year and will hit the $1 million mark by the second half of 2021.
If Melbourne reaches the million-dollar mark, it will be 10 per cent above its previous peak of $909,000 reached in December 2017.
Trent Wiltshire, Domain’s economist, believes Melbourne’s unit prices are set to grow rapidly in the first half of 2020 before growth slows in 2021.
“Strong population growth will continue to underpin demand for housing in Melbourne and support prices. Melbourne’s population is projected to grow by more than 120,000 per year in the next few years.”
“In addition, apartment construction activity will slow in 2020 and interest rates will remain low, both factors which will drive prices higher,” Mr Wiltshire said.
Nationally, property prices are also expected to see strong growth, with the combined capital city median house price forecasted to grow by 8 per cent.
“In 2021, house and unit price growth should moderate due to stable interest rates and as affordability constraints bite. A pick-up in housing construction from late 2020 or early 2021, as well as more new listings, will also limit price rises,” Mr Wiltshire said.
In the next few months, strong buyer demand will boost prices. Since May 2019, the value of new home loan commitments has risen 18 per cent.
Sydney is expected to see double-digit growth in 2020, putting further strain on affordability as median house prices will be $1.25 million by the end of 2020.
For the first time, Brisbane house prices are likely to rise over the $600,000 mark, while is set to have its first growth since the mining boom ended in 2014.