Home

Home price rise set to slow next year

Steven DeareAAP
Westpac economists have forecast house prices to have climbed 22 per cent by year end.
Camera IconWestpac economists have forecast house prices to have climbed 22 per cent by year end. Credit: AAP

House prices will have surged by 22 per cent by the end of the year but economists can see a gradual easing on the way.

Westpac economists have upgraded their forecast for price growth in 2021 from 18 to 22 per cent after lockdowns in some states had only a modest effect.

The biggest gains are expected to be in Sydney (27 per cent), Hobart (25 per cent) and Brisbane (22 per cent).

Low interest rates during the pandemic have been seized on by property hunters.

Get in front of tomorrow's news for FREE

Journalism for the curious Australian across politics, business, culture and opinion.

READ NOW

Prospective buyers will be glad to learn the pace of the increases is not tipped to last.

The Westpac economists predict prices will rise by only eight per cent next year.

This was in part due to an Australian Prudential Regulation Authority decision last week, when the banking watchdog told banks it wants new borrowers’ ability to meet loan repayments assessed at an interest rate of at least three percentage points above the loan rate they are applying for.

The Westpac economists said they expect this to be the first of a number of measures to restrain credit and the housing market.

They expect the biggest shock for home buyers to come in 2023.

The Reserve Bank is forecast to raise rates that year, which will make borrowing more expensive. However the central bank has forecast the move in 2024.

The Westpac scenario has a rate hike prompting house prices to decline by five per cent for 2023.

The economists said while this price drop may seem mild, falls of this measure were rare.

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails