In Melbourne the forecast is for 17.6 per cent growth by the end of 2021 followed by an additional 3.5 per cent rise,adding almost $150,000 to the median property value by the end of 2022.
Collectively,capital city home values are expected to rise 18.5 per cent this year followed by 3.6 per cent growth in 2022. CoreLogic’s Daily Index shows property values are on track to rise in excess of 1.5 per cent in July,despite major lockdowns across the country including Sydney,the nation’s most expensive real estate market.
“The better than expected recovery in the economy and labour market alongside very low interest rates has supported the strong rebound in the property market,” Dr Oster said in the report. Last year,major banks and forecasters werepredicting double-digit price falls due to fears lockdowns would cause unemployment to surge and businesses to fail.
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Underpinning the dramatic slowdown in price growth now expected in 2022 following the surprise boom during the pandemic is an expectation that buyers,including first-time purchasers,are starting to hit an affordability ceiling.
“Affordability constraints will likely begin to[be felt] over the year and see a slowing in price growth as the impact of lower rates fades,” he said.
Tackling housing affordability is becoming a key political battleground ahead of the next federal election.Labor has abandoned plans to scrap negative gearing and to change the capital gains tax deduction.