NAB forecast Brisbane house prices to rise 7% in 2021
News from Property Observer
NAB have revised up their expectations for house prices this quarter and now see an overall national increase of around 5% over 2021.
They expect a "bifurcation of markets", with apartment price growth to be weaker than house price growth, particularly for the larger cities.
"We forecast healthy gains of over 7% in each of Brisbane, Adelaide and Hobart in 2021, while Sydney and Melbourne should rise by 4.5% and 3.5% respectively," NAB's Chief Economist Alan Oster said.
"Indeed, the housing market has held up far better than expected at the onset of the pandemic. Brisbane has been broadly flat."
"The exceptional levels of fiscal policy support (as well as loan deferrals) are likely to have mitigated the impact of the sharp deterioration in the labour market by limiting job losses and providing a key support to household incomes. Lower mortgage rates will have also provided additional support to households," he said.
On the economy more broadly, NAB forecasts see activity having passed through its trough (likely Q2) with a solid rebound in Q3. We see a 4.0% increase in GDP in Q3, led by a large 7.5% rebound in consumption. From there, we see another notable pickup in activity in Q4 before growth slows.
Support from both fiscal and monetary policy makers is likely to remain key, and NAB believe the high degree of policy support will continue over the next couple of years.
Alan Oster said: "We expect rates to remain on hold for at least the next 3 years and think it is likely the RBA will need to expand its QE program beyond the initial 6- month $100 billion goal."
Housing market sentiment (measured by NAB’s Residential Property Index) bounced in the September quarter, but is still relatively weak.
Overall, the Index recovered to -7 points, after falling to a survey low -33 points in Q2. The turn in sentiment reflected moderation in the rate of quarterly house prices over the quarter, although the market in VIC (and to a lesser extent NSW) continued to weigh heavily on overall sentiment.
Sentiment recovered in QLD (up 21 points to +12), although still below average.