Property news you need to know: The week ending 19 September
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One of Australia’s biggest banks has upped their expectations for Australia’s residential housing market, tipping 19 per cent price growth in 2021.
The National Australia Bank (NAB) has raised its expectations for short-term price growth in Australia’s residential housing market.
Drawing on previous estimates, the bank now expects dwelling prices to rise by as much as 19 per cent in 2021.
Citing strong market confidence among property professionals, NAB noted that “the upgrade to our forecast is relatively uniform across capital cities”.
“Faster than expected outcomes in recent months see a higher starting base, and while we see a slowing in the monthly pace of growth from here, we still see solid growth over the next six months,” NAB said.
“The better than expected recovery in the economy and labour market alongside very low interest rates has supported the strong rebound in the property market,” they added.
In addition to this short-term upward adjustment, NAB also lowered their expectations for 2022 to just 3.6 per cent annual price growth. Building on research released earlier this week, NAB noted that the “moderately” significant impact of housing affordability incentives like the First Home Super Saver Scheme is likely to be offset by the rise of house prices in states like NSW.
Introduced back in 2017 and boosted in this year’s federal budget, the First Home Super Saver Scheme (FHSSS) allows eligible first home buyers to withdraw up to $50,000 in voluntary super contributions early for the purpose of raising a deposit for a property.
Earlier this month, NAB executive Andy Kerr said the impact of the scheme “shows in the amount of activity we are seeing through mortgage applications”, but acknowledged the strong headwinds facing the market.
Going forward, NAB warned that the impact of low rates and strong income support will “begin to fade”.
As a consequence of this, NAB forecast Brisbane to take the lead in 2022 with 4.4 per cent annual price growth, swapping places with Hobart at 4.3 per cent.
The bank forecast 3.9 per cent growth for both Adelaide and Perth. Meanwhile, Melbourne beat out Sydney with 3.5 per cent versus just 3.1 per cent.
“Affordability constraints will likely begin to bind over the year and see a slowing in price growth as the impact of lower rates fades,” the bank predicted.
NAB isn’t the only one projecting a cooler 2022 for Australia’s housing market.
Earlier this month, CoreLogic noted signs that Australia’s property market is beginning to cool.
They noted that transaction activity is becoming more volatile, adding that “persistently high housing value growth rates are proving unsustainable, from both an affordability perspective, and renewed headwinds amid a lockdown in Sydney and other parts of the country”.
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