Many buyers have been asking the same question now that lockdowns have hit again in some states.
Experts predict that the housing boom will continue until the end of 2021. Still, potential regulatory policy and Covid lockdowns are likely to cool the property market.
House prices will continue to rise
In a mid-year survey by The Sydney Morning Herald/The Age Scope, most of the 22 top economists expect a rapid slowdown in property growth prices in Sydney and Melbourne for the next year and a half amid these Covid lockdowns.
The panel, on average, forecast house prices will be at 16 per cent for Sydney and 11 per cent for Melbourne by the end of 2021.
In 2022, house values will slow down at 4 per cent in Sydney and 3 per cent in Melbourne. This could send Sydney’s median house prices to $1.23 million from $1.02 at the start of 2021 and Melbourne’s median house value to $915 000 from $800 000.
Major banks have also had their turnaround to a more optimistic outlook on the property prices growth over the next few years.
The most bullish forecast was from ANZ, which predicts house prices will rise by 17 per cent by the rest of the year before slowing down to 6 per cent in 2022.
The Commonwealth Bank also believes the property price growth will remain strong in 2021 and the next and upgraded their forecast from 8 per cent to 10 per cent.
“We expect the house prices will continue to rise throughout 2021 and over the next year, though it will not be at the same rate as what we’ve seen in February and March,” says CEO Matt Comyn.
Prudential measures might be implemented
With the surging house prices and credit growth accelerating, regulators might implement possible interventions to cool the heat off the property market.
Saul Eslake of Corinna Economic Advisory said the Reserve Bank should encourage the Australian Prudential Regulation Authority (APRA) to tighten macroprudential controls as had been implemented in some overseas markets. New Zealand has set some examples where some borrowers are now required to stump up deposits up to 40 per cent.
RBA already has expressed concern at the pace of new lending as property buyers try to keep up with the property price growth and are actively preparing the steps to take.
“We’re not at the point where we’re actively considering implementing some measures, but we are preparing for what might happen if credit growth keeps accelerating,” said RBA’s Governor Philip Lowe.
Further, the Council of Financial Regulators (CFR), in a quarterly statement, maintained lending standards have remained sound, but they’re taking a closer look and preparing potential policy options to address these risks.
What does this mean for you?
Despite the lockdowns, the property market remains strong, and as experts forecast, it should remain strong for the rest of 2021.
And while there is yet tightening of prudential controls and interest rates are still at a record low, now is likely the time to take advantage of what the current property market is offering.
You should note that not all properties will increase in value, making selecting a property a critical decision. Doing your research and seeking property advice will make a strategic approach to property investing.
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