Westpac has forecasted house prices across Australia to grow over the next two year, driven by “broad momentum” supported by monetary conditions and the economy.
Matthew Hassan, senior economist at Westpac, said that the bank is projecting price growth to be “more like 10% this year, nationally.”
“That compares to 4% when we first put a forecast out back in September,” said Hassan. “[Additionally], a further 10% gain is in prospect for 2022.”
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In its latest Housing Pulse report, Westpac noted that Australia’s economic outlook “has continued to improve, the threat from the end of temporary loan deferrals has diminished, and the RBA [Reserve Bank of Australia] has committed to maintaining highly stimulatory monetary policy for several years.”
“The rebound in the second half of 2020 looks to have been stronger, with GDP now estimated to have contracted just 2% in the year vs the 3.5% decline expected in our last report,” said Westpac. “Growth is now forecast to hit 4% in 2021 versus 2.8% three months ago.”
The bank warned that there “are still questions around the extent to which investor activity lifts and the impact of weak migration inflows.”
“However, both may be bigger issues for the market’s next correction phase rather than the current upswing,” it said. “The bottom line is that the upswing has strong, broad momentum that looks to be lifting further and will remain well supported by monetary conditions and the economy. That points to price growth running at 10% in 2021 and 2022.”