All the ingredients for another house price boom are in place, economists say, after prices rose in August and again in September.
Economists participating in The Australian Financial Review’s September Quarter survey were surprised by the pace of recovery in prices following the Federal Election, interest rate cuts and an easing of lending restrictions.
“The turnaround has been sharper than we forecast just a few months ago,” ANZ chief economist David Plank says. “Auction clearance rates, prices and finance have all beaten our expectations.”
Access to cheap money combined with house hunters competing over limited stock have helped drive prices higher, by 3.2% in Sydney and 3.4% in Melbourne in the last four months.
Macquarie senior economist Justin Fabo says “quite strong” house price rises, particularly in Sydney and Melbourne, are occurring “as interest rates decline and many households can borrow a lot more”.
UBS has forecast a 5-10% rise in house prices year-on-year for the coming 12 months, an increase it describes as a “mini-boom”.