ANZ is the latest of Australia’s big banks to adjust its forecasts as the 2021 lockdowns fail to slow rising house prices.
The bank has tipped house prices to jump by another 20% this year as a stronger than expected property market rides out extended lockdowns across Victoria and NSW.
Experts say the higher figure is reflective of the market’s adjustment to lockdowns this time around, as buyers overcome concerns around remote auctions and expats have increasingly joined investors adding to demand.
The new figure is higher than earlier forecasted gains of between 15% and 20%, with the bank also projecting prices would drop to 7% growth in 2022.
ANZ joins Australia’s big four banks in revising its forecasts upwards amid lockdowns, with its updated projections similar to those put out by the Commonwealth Bank (CBA) earlier this month.
NAB in July suggested house prices would jump 18.5% in 2021 and 3.6% next year across capital cities, while Westpac forecast a jump of 18% this year and 5% next.
Felicity Emmett, senior economist at ANZ said the bank had updated its forecasts off the back of continued momentum it had previously predicted would pull back by this point in the year.
Even in Sydney, which is heading into its third month of lockdowns, prices have continued to climb.
“When you look at some of the leading indicators, auction clearance rates, sales to listing ratios, you can see the market is still very very tight and there hasn’t been much of a drop-off in demand or interest in the face of these quite heavy lockdowns,” Emmett said.
In Melbourne where property inspections are currently banned, prices also remained steady, she said.
‘People are gaining confidence’ in buying during lockdowns
Michelle May, a buyers agent in Sydney’s eastern suburbs and inner west, told Business Insider Australia that this year’s lockdowns have not had the same impact on confidence as those at the start of the pandemic in 2020.
Buyer momentum remained strong, she said, and sellers were more confident now than in the early stages of the pandemic.
May said that the combination of low stock levels along with a bounce back in the industry’s capacity to carry out business as usual despite lockdowns was contributing to continued price increases.
“I don’t think we’ll get to a level where there’s going to be equilibrium in the market,” May said.
“People are gaining confidence in online bidding now, which you didn’t see last year when there was a real hesitancy to move to the online platforms,” she said, and “clearance rates were shocking.”
Now May said people were more confident, bidding platforms had been set up and more people were “biting the bullet” and buying online.
“So you’re seeing shorter days on market and high clearance rates because of the huge level of demand out there.”
May said that particularly in Sydney she was also seeing expats — looking to capitalise on the hot market — joining investors in pushing prices up, with an “enormous” increase in expat enquiries in the past year.
Expats, aware that their foreign-earned dollars are worth more in Australia, are seeking to secure “some home turf” she said.
“They are seizing that opportunity knowing full well that by all accounts property prices are going to keep surging,” May said.
“Even if they don’t have the inclination to come back and own it, they’re seeing it as a short-term investment.”
In early June, data from CoreLogic showed that Sydney median home values were rising at a rate of $1,000 a day, a factor that has helped many wealthy property owners record profits of up to $6 million on houses bought and sold within as little as 12 months.
Eliza Owen, head of research at CoreLogic, attributed short hold periods as a “a phenomenon of the rapid value increases seen in dwelling values.”
Gareth Aird, head of Australian economics at the CBA, said Sydney was expected to see the largest price hike on the bank’s forecasts, at 24% growth.
The ANZ report noted that in Sydney, the most expensive capital city, the average home value was now more than nine times the average income, with housing affordability deteriorating across all states.