House prices have reached record highs as the Reserve Bank of Australia keeps the official cash rate on hold, but experts say prices could surge more than $50,000 by the end of the year.
House prices in every capital city are expected to increase based on current market conditions, with Perth set to see the biggest gains, a panel of 41 experts surveyed by Finder revealed.
“The market is surging on the back of low rates, government stimulus, and Aussies having more in their savings accounts on average.
“We expect this to continue through 2021, but Perth’s snap lockdown is a reminder that things can change quickly,” head of consumer research at Finder, Graham Cooke, said.
Perth could see a 7.5 per cent increase on the current median to $548,250 - a jump of $38,250 - with Brisbane set to see the second-largest price increase (6.9 per cent).
House prices in Sydney could surge by 5.5 per cent, or $53,305, while Melbourne could see prices jump by 5 per cent, or $37,500.
Adelaide and Canberra should see gains of 5.3 per cent, while house prices in Darwin and Hobart could rise by 4.7 per cent and 4.5 per cent respectively.
Refinancing on the rise
According to the experts, around 200,000 Aussies are set to switch lenders to get a better mortgage rate in 2021.
That’s an increase of around 9 per cent from the 182,000 Aussies who made the jump in 2020.
But homeowners might not even have to worry about making the switch themselves, with lenders now making the first move to keep their customers.
“We usually tell Aussies to call your bank and ask for a better deal, but some banks are now calling their own customers to offer lower rates to keep them from jumping ship.
“If this has not happened to you, it’s definitely time to dig out your loan details and compare your rate,” Cooke said.
Will the RBA cut the cash rate again?
The official cash rate is currently at 0.10 per cent, and experts predict that’s where it will stay when the RBA announces its decision on Tuesday 2 February.
"There is no reason for the RBA to move interest rates at this stage,” CLSA Premium CEO Peter Boehm said.
“In fact, current market sentiment indicates the cash rate will remain at its current level for the foreseeable future. “
Bendigo Bank’s David Robertson agreed, saying the cash rate will likely remain low for the next two years.
“The RBA has been clear in their message that the official cash rate will remain at its current level for some years, although progress to full employment may occur more quickly than the market is currently pricing,” he said.
“An increase in rates in around two years is quite plausible."