The forecast, based on the model developed by RBA’s economists, Peter Tulip and Trend Saunders, foresees house prices growth of 8% over 2021, including an additional 9% in 2022, before a final spike of 8% in 2023. This takes the cumulative growth through to end-2023 up to 25%.
The actual growth in prices delivered in the first four months of 2021 suggest that these forecasts are conservative. Other major forecasters expect house prices to lift by at least 15% in this year alone.
According to CCI’s modelling, national house prices in real terms are currently up about 6% from prior to the pandemic, which contrasts with past recessions where the median peak-to-trough decline has been 15%.
Even during the global financial crisis – which the RBA classes as a brief slowdown rather than a recession – real house prices fell by 9%.
“The resilience of prices during the pandemic stands as testament to an aggressive and generally unprecedented fiscal and monetary policy response across the advanced economies, with a critical role played by job retention schemes,” says Kieran Davies, chief macro strategist at CCI.