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- NAB has upgraded its forecasts for dwelling prices, which are now expected to rise 14 per cent in 2021 and 6 per cent in 2022
- Although Victoria is lagging behind, the NAB Quarterly Australian Residential Property Survey Q1 2021 said housing market sentiment has lifted sharply across the country
- The bank predicts a 16.2 per cent rise in dwelling prices for Melbourne in 2021, but leading the pack is Hobart, with NAB predicting a 19.1 per cent growth
- The report found that the latest lending data showed solid increases in both owner-occupier and investor loan approvals
- New housing finance fell slightly but remains at exceptionally high levels
NAB has upgraded its forecasts for dwelling prices, which are now expected to rise 14 per cent in 2021 and 6 per cent in 2022.
Although Victoria is lagging behind, the NAB Quarterly Australian Residential Property Survey Q1 2021 said housing market sentiment has lifted sharply across the country.
Despite this, the bank predicts a 16.2 per cent rise in dwelling prices for Melbourne in 2021, but leading the pack is Hobart, with NAB predicting 19.1 per cent growth.
“On the back of ongoing low interest rates alongside a significantly better than expected recovery in the economy and labour market we now expect strong gains in dwelling prices of around 14 per cent this year, followed by a more moderate but solid gain of around 6 per cent per cent next year,” the report said.
Despite the 14.1 per cent forecast, NAB is not the most bullish out of the big four, with ANZ predicting a possible 17 per cent rise.
The upgrade to their forecast is relatively uniform across capital cities, with each expected to have double-digit growth in 2021, before tapering off in 2022.
“That said we expect apartment prices, particularly in the largest cities, to lag house prices as a result of weaker population growth,” the report stated.
“More broadly we expect the economy to continue to recover strongly, but for rates to remain low on the back of low inflation and weak wage growth. Only once spare capacity in the economy erodes and inflation sustainably returns to target, will the RBA begin lifting rates.”
The report found that the latest lending data showed solid increases in both owner-occupier and investor loan approvals.
“We also expect growth in the three largest cities (up over 15 per cent) to outpace that of Adelaide and Perth – though these are also expected to post solid gains of 10 per cent plus,” NAB Group Chief Economist Alan Oster said.
“Hobart is expected to rise even more strongly over the year but has already risen significantly since December. Notably, regional house prices are no longer outpacing capital city growth, but have continued to grow strongly too, increasing 2.5 per cent month on month.”
New housing finance fell slightly but remained at exceptionally high levels, according to the report.
“Amongst loans for owner-occupiers, the most rapid growth has been in the loans in the dwelling construction segment,” Oster said.
“The Q4 2020 national accounts indicated that dwelling investment rose by 3.1 per cent quarter on quarter ending the downward trend evident since mid-2018.”
