Low interest rates, rising consumer confidence and government support measures could see house prices accelerate next year.
House prices rose across the nation for a second month in a row in November and could surpass their pre-COVID levels in early 2021 if the pace of the current trend persists.
Backing this positive outlook, the Australian Bureau of Statistics said approvals for private sector houses rose for the fourth consecutive month in October to the highest level since February 2000.
At the same time, one of Australia’s biggest retail banks said demand for its home loans was the strongest seen for more than two years.
National Australia Bank executive for home ownership Andy Kerr said there had been a 25 per cent jump in NAB loan applications over the past six weeks compared to the previous six.
“Demand has been supported by record low rates, growing confidence in the economic recovery and strong government support measures,” Mr Kerr told AAP.
“We expect strong interest to continue given the likelihood of low rates for several years and as more stimulus measures come into effect from state governments.”
The Reserve Bank kept rates on hold at its final board meeting for the year on Tuesday.
NAB is forecasting property price growth of upwards of five per cent in each of the next two years, with apartment prices likely to lag behind house price growth.
The CoreLogic home value index for November rose 0.8 per cent to be 3.1 per cent higher over the year.
“If housing values continue to rise at the current pace we could see a recovery from the COVID downturn as early as January or February next year,” CoreLogic’s head of research Tim Lawless said.
“The recovery in Melbourne, where home values remain five per cent below their recent peak, will take longer.”
Housing values moved to record highs in Brisbane, Adelaide, Hobart and Canberra through November.
The ABS said building approvals rose 3.8 per cent in October to be 14.3 per cent higher than a year earlier.
Private sector house approvals rose by a further 3.1 per cent to be a massive 31.7 per cent higher on the year.
Housing Industry Association economist Angela Lillicrap said the data continues to show the positive impact of the Morrison government’s HomeBuilder grants program.
She said HIA’s own new home sales data suggests that detached house building approvals will continue to be strong over the coming months.
“The extension of HomeBuilder will see these strong results carry on well into 2021,” she said.
HomeBuilder has been extended three months to March next year.
CORELOGIC HOME VALUE INDEX FOR NOVEMBER:
* National – up 0.8 per cent
* Sydney – up 0.4 per cent
* Melbourne – up 0.7 per cent
* Brisbane – up 0.6 per cent
* Adelaide – up 1.3 per cent
* Perth – up 1.1 per cent
* Hobart – up 1.4 per cent
* Darwin – up 1.9 per cent
* Canberra – up 1.9 per cent
* Combined capitals – up 0.7 per cent
* Combined regional – up 1.4 per cent