Sydney home prices are set to boom 23 per cent by the end of this year, according to a new forecast from ANZ.
ANZ senior economist Felicity Emmett said the bank predicts Sydney home prices will have risen 23 per cent by the end of the year - leaving many Aussies to wonder when prices will cool.
“We have bumped up our housing price forecasts a little and now see prices rising just above 20 per cent in 2021 on average across the capital cities,” Emmett said.
“We still anticipate some slowdown in price growth over coming months, driven by slightly higher mortgage rates and decreasing affordability.”
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Emmett said the current momentum behind property prices suggests that both 2021 and 2022 could outpace all previous forecasts - meaning next year may be just as competitive and first home buyers could be left behind.
“Affordability constraints are now biting, and these are likely to see first home buyer lending continue to drift lower,” she said.
However, the research also suggests that young Aussies are turning to the bank of mum and dad for more help than ever before - which Emmett said is worrying.
“The average amount of parental assistance for home deposits has grown to approximately $90,000,” she said.
“If significant parental assistance for first home buyers is as common and large as the survey suggests, this is a very negative signal for both affordability and intergenerational inequality.”
Buyer demand is high
This comes as demand for homes surges to its highest in four years.
The Domain’s Buyer Demand Indicator (BDI) recorded its highest ever demand for property in March 2021.
The impact of the strong demand for property has led to a large number of houses selling well above the decade average.
In capital cities, 28 per cent of homes sold above the decade average, and this jumped up to 60 per cent for regional areas.
“Record low interest rates, prioritisation of home-life due to travel restrictions and accumulation of savings through COVID-19 has given Australians greater buying power which increased buyer demand as well as house prices,” Domain’s chief of research and economics, Dr Nicola Powell said.
“Demand for houses and units are now on par as house prices create affordability restraints for first home buyers, this is particularly evident in Sydney and Melbourne.”