Hot property: Why Westpac is tipping Queensland house prices to surge 20 per cent

Westpac is predicting a rise of 20 per cent in Brisbane house prices over the next two years, the highest in Australia, but not before some pain.

Sep 18, 2020, updated Sep 18, 2020
Brisbane house prices are expected to jump 20 per cent

Brisbane house prices are expected to jump 20 per cent

The bank’s latest forecast also predicts Queensland, Western Australia and NSW would lead Australia out of the recession with economic growth in the second half of 2020 of 5 per cent in the two eastern states, and 7 per cent in WA.

It has upgraded its national growth forecast to 4 per cent.

“We now expect many capital (housing) city markets to be more resilient with a national fall of 5 per cent between April (2020) and June (2021),” the report from chief economist Bill Evans and Matthew Hassan said.

This would include a fall of about 2 per cent in Brisbane house prices, an improvement on the previous forecast of -8 per cent.

“Of most importance is that we are much more optimistic about the pace of price appreciation over the following two years with a total expected increase of 15 per cent,” Evans and Hassan said.

But they said there would be four distinct phases. The first was the collapse in the economy in the June quarter which led to a 0.9 per cent fall in dwelling prices in Brisbane. That would be followed by stability in the December quarter and the following March quarter.

Distressed sales would mark the third phase in 2021 and the fourth phase will come after the selling pressure has worked its way through the market.

“This recovery will be supported by low rates, which are likely to be lower than current levels, ongoing support from regulators, substantially improved affordability, sustained fiscal support from Federal and State governments, and a strengthened economic recovery,” the report said.

“In the fourth phase, which we expect will continue for at least two years, prices are likely to be responding to the ongoing strong liquidity in the system, record low interest rates and freely available credit.”

However, the likely sell off predicted in the third stage could produce significant financial pain.

They said that if 10 per cent of loans that were currently deferred ended up on the market there could be 60,000 urgent sales, accounting for about 15 per cent of turnover, which would be enough to shift prices.

Evans and Hassan said the Victorian downturn from the forced lockdowns had been less severe than predicted and the contraction there was no expected to be -4 per cent rather than -9 per cent.

Unemployment nationally would remain above 7 per cent.

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