Australian property prices are set to rise, according to the bosses of Australia’s big four banks.

Economists and property experts have declared record low interest rates will save the housing market from what was first believed to be a tragic period for house values. 

Fears around a slump have now evolved into confidence across the banking sector and throughout larger community. Analysts also adding that the surge we are now seeing in buyer activity is unlikely to turn into bubble territory given the larger focus is on our affordable regional markets. 

CBA – Housing Market is an attractive, stable asset

Matt Comyn, chief executive of Commonwealth, described the stability of the Australian housing market served as an attractive stable asset for investors chasing alternatives to record low rates of return.

Mr Comyn addressed the Australian Financial Review Banking & Wealth Summit stating “There is the potential for people to chase riskier assets. I think the stability of the Australian housing market given the overall savings base is a positive”. 

CBA has estimated a national increase of at least 5% in 2021, with Mr Comyn explaining “It feels like there is a lot of demand, there is certainly a lot of application demand, it will be interesting to see if that flows into calendar 2021”.

ANZ – ‘Prices are going to rise’

The economics team at ANZ is even more bullish about the immediate future of our housing market, forecasting a 9 per cent rise in property prices in 2021 after totally reversing the banks forecast of a fall. 

Head of retail and commercial lending at ANZ, Mark Hand,  said the worst was over for the property market, “We have gone from thinking house prices are going to fall to prices are going to rise.”

NAB – ‘Remote working trend will fuel demand outside outside our cities’

National Australia Bank has taken a more strategic approach to sharing their thoughts on the property market in 2021, drawing attention to the fall in demand for inner city appartments and the rise in demand from housing outside of our biggest cities.

NAB chief executive Ross McEwan said “This shift in demand was driven by increased remote working, brought about by the pandemic”.

“It will be some areas up, in some areas down and I think the longer term for housing is still looking pretty good,” Mr McEwan said.

Mr McEwan continued to put a spotlight on how significant the impact this new remote workforce would have on areas outside of our cities, highlighting new market conditions that allow workers to buy a much more affordable property an hour or more from where they currently live, without the need to commute to work.

“Of course you’ve seen the reverse going on in some apartment buildings where rentals are dropping therefore the price of those apartments will drop” Mr McEwan warned.

Despite accepting the economy had bounced back faster than NAB and other banks had anticipated, he said there was “no risk of things overheating”.

RBA – ‘Low interest rates could cause house prices to rise at an unsustainable rate, but unlikely’

Reserve Bank governor Philip Lowe has also weighed into the conversation, explaining that reforms were available and effective if ever a property bubble was to appear.

However he said “At this point the record low 0.10 per cent official interest rate did not mean a housing bubble was being formed”.  

“It is certainly possible that interest rates cause housing prices to rise at an unsustainable rate but it’s unlikely,” Dr Lowe said.

“The population dynamics have changed a lot. It is the lowest population growth in more than a century. It doesn’t feel like the fundamentals are there to drive unsustainable increase in housing prices.”

CoreLogic – ‘Australian housing market has gone from zero to hero’

Lisa Claes, CEO, CoreLogic International said property investment had gone from zero to hero since the COVID-19 crisis hit but that there would be no bubble.

“While the signals are strong they are not out of control. APRA and RBA are all over this and they will respond when they need to,” she said.

Are you planning to purchase an investment property in 2021?

The property investment landscape has changed significantly, please protect yourself from making investment mistakes that can easily be avoided. For more details around these changes and how you can capitalise on the post COVID-19 property market rebound click on the link below to watch our most recent online event where we map out the easy steps you can take to build wealth safely whilst protecting your lifestyle today.