Westpac revised its forecast for short-term house prices, citing a more substantial increase in lower interest rates and a more moderate-than-expected recession as reasons for the adjustment.
According to Westpac Senior Economist Bill Evans, the lender expects a house price correction of 5% through the end of 2021, followed by a hike by 15% over the next two years.
"To date, our opinion was for a 10% nationwide price drop from the April 2020 peak through June next year," Evans said. "From there, we expected increases of around 4% per year over the next two years."
“We now expect many capital markets to be more resilient with a 5% national decline between April and June of next year, split between: Melbourne (–12%); Sydney (–5%); Brisbane (–2%); Perth (apartment); and Adelaide (2%). Most importantly, we are much more optimistic about the pace of price appreciation over the next two years, with an expected total increase of around 15%. "
According to Evans, the recovery will be “supported by low and sustained rates, which are likely to be even lower than current levels; continued support from regulators; a significantly improved affordable price; sustained financial support from federal and state governments; and a strengthening of the economic recovery. "
Evans said he saw the house price profile unfold in "four distinct stages".
“The first, which is now largely outdated, is the initial price impact of the collapse in economic activity in the June quarter. This led to widespread declines in Sydney (–2.6%); Brisbane (–0.9%); Perth (–2.6%); Adelaide (–0.1%) and a more severe drop in Melbourne (–4.6%). However, the pace of deterioration outside Melbourne was more moderate than expected in March, ”he said.
“The second leg, which will cover the quarters of December and March, will be a period of relatively stable prices, perhaps with some modest increases, although Melbourne will be at least a quarter behind the other states and will still experience declines. in the prices for the December quarter. The third stage will see a limited resumption of downward pressure on prices through 2021, as we see an increase in 'urgent' or distressed sales related to borrowers in difficulty or unable to resume mortgage payments. Again, a larger adjustment is likely in Melbourne than in other cities. The fourth phase will come once this selling pressure has worked in the system and prices rise again. "
Top suburbs:
Eagle vale
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st kilda west
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melton
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Midland
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