The risks to the outlook appear evenly balanced. While the current momentum in prices suggests growth in both 2021 and 2022 could outpace ANZ Research’s forecasts, particularly if macroprudential tightening is delayed, the increased uncertainty around the Delta variant and extended lockdowns pose some offsetting downside risk.
House prices rose a rapid 1.9 per cent month-on-month in July and were up 6.6 per cent over the previous three months.
Strength was broadly based with Sydney (+2.1 per cent month-on-month) and Brisbane (+2.1 per cent) leading the pack. Momentum was also evident in Hobart (+1.9 per cent), Melbourne (+1.8 per cent) and Adelaide (+1.8 per cent), while Perth made the smallest gain (+0.8 per cent). Prices are now well above year-ago levels across all capital cities.
Recent growth in housing finance suggests prices will continue to rise solidly in coming months. While owner-occupiers were early drivers of the market, investor lending is now surging. Over the six months to June, investor lending rose 55 per cent and has more than doubled since June last year.
While still running at a solid clip, owner-occupier lending has slowed a little, largely because of a pull-back by first home buyers. Over the six months to June, lending to first home buyers fell 3 per cent while lending to other owner-occupiers rose 23 per cent. Overall though, momentum in housing finance is slowing after a year of stellar growth.
At a glance
House price expectations remain elevated despite the uncertainty.