If you were hoping house prices might come down as a result of the lockdowns engulfing half of Australia, don’t hold your breath.
NAB has predicted that property values will rise by 18.5 per cent in 2021, and this number isn’t being scaled down in light of the lockdowns.
“In terms of house prices, they held up pretty well through last year and also even through some of the more recent lockdowns. So we haven't factored in a huge impact on prices,” NAB senior economist Gareth Spence told Yahoo Finance.
“If we see some disruptions in the near term next month or two because of lockdowns, we remain optimistic they'll bounce back.”
However, the Australian economy more broadly will certainly be impacted, with Treasurer Josh Frydenberg already predicting negative GDP growth in the September quarter before returning to growth in the December quarter.
In turn, there may be some level of “disruption” across the housing market by way of lower overall listings and a longer time period that a property might spend in the market.
But the impact of this disruption is expected to be very temporary. “Until now they've been snapped up quickly,” said Spence. “We’re still optimistic on the price side.”
Australia’s biggest city will have a similar narrative, said University of South Australia professor Peter Koulizos.
“Sydney is now in the grip of a severe lockdown so initially, we should see property prices slow down,” he told Yahoo Finance.
“But once the lockdown is over, prices will rebound. This occurred in every capital city once we came out of lockdown last year – the same should occur this year.”
Real estate sector adapts to lockdowns
For some, the lockdowns will force some Australians to push out their plans to buy or sell a home.
But property experts are also observing that the real estate market is getting better at adapting quickly to restrictions.
“We're finding that the property industry has become quite effective and operating even in lockdowns; the industry is still allowing people to inspect in a virtual way, conducting auctions online,” said hotspotting.com.au managing director Terry Ryder.
Auction rates only dropped slightly across Australia’s capital cities last weekend despite Sydney, Victoria and South Australia all in lockdown.
“It's just been a story of not only resilience, but you have to say defiance since the pandemic struck,” Ryder said.
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Once the lockdowns lift, we can expect the property market to roar back to life.
If the housing market dipped slightly early last year at the beginning of the pandemic, it was only because there was much more uncertainty about COVID-19 and how the economy would fare, said AMP Capital chief economist Shane Oliver.
But the mortgage repayment holidays served as a buffer, preventing thousands of mortgages from defaulting.
“And then house prices took off. Given that experience and with the bank payment holiday back again for those who need it, it's hard to see much of a fall, if any,” said Oliver.
Those keen to sell their homes are only delaying putting their homes on the market for a few weeks or months, he said.
“I suspect that once the lockdown is over prices will keep rising given still low mortgage rates and the home buyer market will quickly go back to normal as restrictions around inspections and auctions are removed. Just like we saw last year.”
House price growth to slow significantly in 2022
NAB’s prediction for house price growth for next year is a fraction of what it’s predicting for this year: 3.6 per cent.
“Given the speed of the rise as we've seen in the year to date, I actually pulled back a little bit on next year's forecasts for property,” said Spence.
“They tell the story that prices have been pretty strong, activity has been pretty healthy.
“But part of that affordability aspect will start to bite, the impact of lower [interest] rates will wear off.”