According to a report by Goldman Sachs, house prices in Australia are expected to rise 10% this year, driven by improving market confidence and the rate environment low.
The positive outlook for house prices also came with heightened expectations for residential construction.
"This outlook assumes that immigration normalizes to pre-COVID-19 levels in 2022 and that the RBA does not increase the cash rate until the second half of 2024," said Andrew Boak , Chief Economist for Australia at Goldman Sachs.
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Boak expects prices to increase another 5% in 2022 and 3% in 2023.
"More prolonged border restrictions or an earlier than expected tightening of monetary policy present downside risks," he said.
Boak said concerns about housing debt levels could force the RBA to change its stance on interest rates.
"For the time being, however, we expect the RBA to remain accommodating and focus on meeting its inflation and unemployment targets, and minimizing the risks associated with rising commodity prices. housing, ”he said.
Tim Lawless, head of research at CoreLogic, also believes that macroprudential mechanisms would be adopted if financial stability risks arise due to soaring prices.
"Macroprudential levers have proven to be effective before when concerns about investor activity and interest-only lending became overrepresented in the market. A new round of credit crunch would likely have the same effect by reducing the availability of credit in specific risk areas, ”he said.
Lawless said the low interest rate environment continues to be a major factor influencing the rebound in selling activity and home values.
"With mortgage rates likely to remain at their all-time high, at least this year and possibly next year, we expect to see further upward pressure on house prices," he said. -he says.
However, according to Lawless, despite rapid gains since October of last year, house prices are only 2.8% higher than their previous high in 2017.
"While housing demand is expected to remain strong, it is likely that the current rapid rate of appreciation will subside as affordability constraints housing will become more difficult, tax support will be removed and first-time home buyers will disappear, "he said.
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