Big 4 bank now sees property prices rising this year

Dwelling prices across the five major capital city markets are expected to rise by 7 per cent over the 2023 calendar year, according to the latest forecasts from economists at Westpac.

The bank’s economists had previously predicted that property prices would remain flat this year due to the impacts of higher interest rates and broader economic headwinds.

However, they noted that ongoing momentum in the property market and an improved near-term outlook for interest rates and growth had led them to revise up their forecasts.

“Australia’s housing market has continued to outperform expectations, particularly with respect to prices,” commented Westpac senior economist Matthew Hassan.

“Across the five major capital city markets, dwelling prices have now risen 4 per cent over the year to date – a 5.2 per cent rebound from February’s low retracing just over half of the 9.7 per cent fall over the previous 10 months.”

Mr Hassan indicated that price gains have been “well sustained” despite ongoing rate hikes from the Reserve Bank of Australia (RBA) in February, March, May, and June this year.

“The consistent picture from prices, turnover, auction activity, new finance approvals, and sentiment is of a broadening recovery, albeit one that is being led by prices with the volume of activity and demand still relatively subdued,” he said.

According to CoreLogic’s most recent national Home Value Index (HVI), Australian property prices have lifted for five months in a row, including an increase of 0.7 per cent in July.

A surge in migration inflows, coupled with a tightening in rental markets and low levels of supply, are seen by Westpac as being the main impetus for recent gains in the market.

Mr Hassan also drew attention to the possibility that excess savings accumulated during the pandemic are being put towards property, particularly among higher

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