Australian Property Market Surges: Major Banks Revise Predictions as Cities Witness Remarkable Growth - Property Inc

Australian Property Market Surges: Major Banks Revise Predictions as Cities Witness Remarkable Growth

In a surprising turn of events, Australia’s property market is witnessing a bullish surge, defying previous predictions of stagnation. Westpac, one of the nation’s Big 4 banks, now predicts a rise in dwelling prices across the five major capital city markets by 7 per cent this year, a noticeable uptick from its earlier forecast. This comes amidst broader concerns related to the impact of higher interest rates and other economic challenges.

The bank had initially anticipated a flat performance in the property sector for 2023, basing its predictions on the ramifications of soaring interest rates and general economic challenges. But the current market dynamism has forced the bank to reconsider. “Australia’s housing market has continued to outperform expectations, particularly with respect to prices,” observed Matthew Hassan, Westpac’s senior economist. He further highlighted that “across the five major capital city markets, dwelling prices have now risen 4 per cent over the year to date”.

This optimistic revision mirrors the data presented by Sky News, which reported notable growth in property prices across several Australian suburbs. Remarkably, capital gains of $500,000 have been documented in Sydney, with certain communities such as Glenhaven and Putney seeing their top property values surge by over a million dollars

Several factors have influenced this unanticipated boom. The five consecutive months of property price hikes, a phenomenon confirmed by CoreLogic’s national Home Value Index (HVI), can be attributed to increased migration inflows, tightened rental markets, and a scarcity of supply. Hassan also spotlighted the probable influence of the pandemic-era accumulated savings, especially among high-income households, which are now being channelled into real estate

Contrary to the bank’s earlier forecast of a “significant loss of momentum for housing” due to a slackening economy and increased interest rates, Westpac has now altered its stance. Hassan elucidated, “Following the RBA’s decision to pause in August, we now see interest rates remaining on hold for an extended period”.

Nevertheless, the property market does have its share of uncertainties, particularly concerning investor activity. Despite the current atmosphere of growth, Hassan remarked that a mere 5% of Australians view residential property as the optimal location for savings, suggesting that a full-blown investor boom might be distant.

Still, with Westpac’s projections of property prices soaring by 4% in both 2024 and 2025, it appears that the Australian housing market is poised for a period of sustained growth, reaching beyond their previous peaks by the end of 2024.

References:

“Big 4 bank now sees property prices rising this year” by Jon Bragg. https://www.smartpropertyinvestment.com.au/research/24989-big-4-bank-now-sees-property-prices-rising-this-year

“Australian property prices are experiencing a boom” by Sky News. ↩ https://www.skynews.com.au/business/real-estate/australian-property-prices-are-experiencing-a-boom/video/3854955b66e113e5e8a126a8cf2ef759

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