Westpac forecasts even stronger 2021 housing price rise
Westpac now expect more of their recent 20 percent property price rise forecast to occur in 2021.
Westpac economists Bill Evans and Matthew Hassan kept their forecast for a 20 per cent gain in dwelling price forecasts for 2021 and 2022 but shifted it from thinking it would be evenly spread at 10 per cent gains expected in both years.
“We now expect more of this rise to come in 2021, retaining the 20 per cent call overall but with a 15 per cent gain in 2021 slowing to 5 per cent in 2022,” they said.
The initial forecast came in mid-February.
The duo noted Australia’s housing market is "evolving quickly."
"The strong upswing that emerged late last year has seen price growth run well ahead of expectations over the first few months of the year.
"At the current cracking pace, our forecast 10% lift in prices for 2021 set down in February will be achieved by around mid-June.
"Some moderation is likely, particularly as affordability becomes more stretched for owner occupiers.
"However, a sudden loss of momentum near term looks unlikely, particularly with markets tight, price expectations bullish, investor activity showing signs of picking up and highly stimulatory financial conditions still firmly in place.
"Accordingly, we have marked up our near-term forecast for dwelling prices with a 15% gain now expected nationally in 2021.
"This represents a pull-forward of the cumulative 20% rise we had already been forecasting over 2021 and 2022.
They noted the 20% ‘limit’ reflects two key views: "that deteriorating affordability will become a more binding constraint for owner occupiers as prices rise; and that regulators will intervene in the market in 2022 as investor activity lifts and credit growth reaches uncomfortable levels."
