NAB forecasts Melbourne house prices to go up to 16 per cent in 2021
- Posted By Ndl 1 Realty
The National Australia Bank (NAB), one of Australia’s big four banks, predicted a massive 16.2 per cent increase for home prices in Melbourne in 2021, an estimate that has since doubled from just a couple of months ago.
The market sentiment in the whole of Victoria, especially in the property sector, has since picked up and soared since the start of 2020. Moreover, NAB expects the prices to stabilize next year, with a prediction of only 5.5 per cent price hike.
The forecast comes as Melbourne home values rose by 2.4 per cent in March, with a 4.9 per cent rise over the previous quarter that resulted in a median value of $736,620, according to CoreLogic.
Another research conducted by the Real Estate Institute of Victoria showed recently an ordinary Melbourne house sold for over a record of $1 million in the first quarter of 2021.
So what drove the city’s housing market to the skies?
According to Alan Oster, NAB Group chief economist, the recent real estate boom is fueled by an increase of first-home buyers taking advantage of record-low interest rates, low investor activity and the absence of overseas buyers.
“What’s basically happened is that you’re getting to a situation where people can now afford to pay off a mortgage cheaper than if they rent,” Mr Oster said.
“If you look at the last six months and annualise it, it's going up about 15-18 per cent and we don’t really see that slowing.
“So what we’ve done is taken what we’ve already seen and put some more moderate increases in house prices for the rest of the year.”
Further, NAB predicts that house prices in Australia will rise by 14 per cent in the next year, then a more moderate 6 per cent.
A good combination of lower interest rates, the HomeBuilder grant, stamp duty discounts and a solid economic recovery played a major part in people coming back to the market — and helped offset the impact of COVID-19 job losses, slashed rents and low migration levels.
ANZ is also tipping a 16 per cent rise in Melbourne prices in 2021, while Westpac is predicting 12 per cent followed by a further 5 per cent in 2022.
The Commonwealth Bank has forecast a more modest 7 per cent increase this year.