RBA Predicts 30% Rise Over Next 3 Years

With Australia seeming to have transitioned through the worst of the pandemic so far, homeowners and buyers are starting to breathe out again. Confidence is growing, largely due to the fact that some of the worst-case property market predictions of 2020 simply did not eventuate.

Analysis from the Reserve Bank of Australia in January, suggested house values could jump by 30% over the next three years. It’s thought that this growth will be driven by an unusual level of consumer confidence, that’s come out of the experience of the pandemic and will be sustained over the next few years - hence the RBA’s prediction.

There are a few key components underpinning that confidence – the primary one being record low interest rates. “Interest rates have been this level for about 3 to 5 years now, so buyers have already factored that in”, Ray Ellis from First National Real Estate explains. “Low interest rates have not only become the norm, they’ll be the norm for buyers in Australia for many years to come. They look at all the forecasting, at what they see is going to happen, do their research, then factor the results into another 3 to 5 years.”  Not to mention the fact that low interest rates were sustained throughout the multiple complex challenges of 2020. This experience fuels their belief, strengthening their confidence in borrowing, which, according to the RBA could push property prices considerably high.

This is great for existing property owners, but if you’re looking to buy, surely this raises deep concerns. Not according to First National Real Estate’s Ray Ellis. “Buyers are very willing to put their cash forward, because of their strong confidence in low interest rates. With the current average new home loan sitting around $530,000, Buyers aren’t afraid to have a slightly larger mortgage, if it means buying the property that suits their lifestyle of work requirements.”

The age-old love affair Australians have had with property in general was reignited with so many of us spending more time than ever before in our homes. Ray Ellis explains. “It’s very difficult for two people to work from home in a one-bedroom apartment. It's very difficult for people to work from home in a small house with no backyard with children. So, the great Australian dream - that slightly bigger house with a backyard or an outdoor entertaining area is now right back in fashion”.

Of course, the current seller’s market will be irresistible to many, evidenced by a dramatic increase in listings in late December. Many are making the choices around their new lifestyle requirements. “They're taking their agenda in their own hands and they're looking to downsize or change. What COVID has taught us is living and working requirements in our house is what's important, and the strong market is putting them in a strong position”.