Will Covid Delta derail our property markets?
The answer is NO according to the latest ANZ Bank research.
Our housing markets remain in very good shape with national house prices continuing to rise strongly, even in Sydney where increasing levels of mobility restrictions have been in place since June.
According to ANZ, ultra-low interest rates, high savings buffers and ongoing fiscal support are likely to continue to support the housing market.
In fact ANZ have bumped up their 2021 forecasts a little.
They now forecast average capital city housing prices to rise just over 20% in 2021.
However, ANZ expect that price gains will moderate from the hectic pace of the first half of this year, given the increased uncertainty around the outlook, slightly higher fixed mortgage rates, and the prospect of macroprudential measures.
And then they are expecting average price gains of 7% in 2022. Still very respectable growth!
Currently, our property market remains tight.
As sales continue to outpace new listings, leaving stock levels very low property prices will continue to rise.
But ANZ anticipates some slowdown in price growth over the coming months, driven by slightly higher mortgage rates, decreasing affordability, and the potential for macroprudential tightening.
While owner-occupiers were early drivers of this property cycle, investor lending is now surging.
Over the six months to June, investor lending rose 55% 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.
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Over the six months to June, lending to first home buyers fell 3%, while lending to other owner-occupiers rose 23%.
Overall, though, momentum in housing finance is slowing after a year of stellar growth.
Moving forward affordability constraints are likely to bite and this will see first home buyer lending continue to drift lower.
However housing finance rose 83% in the year to June, and while the housing finance is coming off the boil, house prices look to continue to rise solidly, as housing lending is a leading indicator and property values tend to rise 3 to 6 months after finance approval is obtained.
The following chart shows what is likely to happen to house prices moving forward based on recent finance approvals.
The following charge from ANZ Bank show the resilience of our housing market despite all the current issues.
AANZ report that overall, households and businesses remain upbeat about the house price outlook as more property investors are returning to the market and auction clearance rates remain strong