At the start of the coronavirus pandemic,economists and housing analysts feared a collapse in home prices that would feed into a downward economic cycle of wealth destruction and subdued consumer spending.
Instead,on the back of record low interest rates and large government support programs including the JobKeeper wage subsidy and the COVID supplement for welfare recipients,prices in all capital cities bar Melbourne have risen over the past 12 months. Regional areas have seen even larger increases.
Commonwealth Bank predicted on Monday prices would continue to lift. It believes Sydney’s prices will climb 7.5 per cent this year and 5.8 per cent in 2022 and is tipping Melbourne prices to increase 7 per cent in 2021 and another 5 per cent the following year.
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That would take Sydney’s median house price towards $1.2 million and Melbourne’s beyond $920,000.
Dwelling prices are tipped to climb by 16.6 per cent in Brisbane over the next two years,17.7 per cent in Perth and 15.5 per cent in Canberra.
CBA’s head of Australian economics,Gareth Aird,said with interest rates below the return on rental properties,the fundamentals for house prices were strong.