Last week, Westpac economists released an updated forecast for property prices in the coming few years. Some welcome news for many of us is that their COVID-induced downturn forecasts have been revised and reduced. Instead of the initial forecast that prices would fall 10 percent before recovering, they now believe national prices will bottom out at a 5 percent peak-to-trough discount, much of which has occurred already. Better news yet, however, is the strong upswing expected over the two following years.
The post-COVID recovery and upswing are expected to come off the back of historically low interest rates, as well as a pent-up appetite for activity in the market, which began to surge in mid-to-late 2019 before being stalled by the pandemic. Westpac forecasts the 2021-23 upswing will result in a 15 percent increase to national property prices, with some cities faring better than others.
Brisbane investors have been offered a glimmer of hope following a decade-long price stagnation, with Westpac forecasting the sunshine state capital to outperform the rest of the country at 20 percent over the two-year period. Brisbane is also coming off a stronger base, with a minimal pandemic-era price correction compared to the likes of Sydney and Melbourne. This affirms Brisbane’s recent trend of lower volatility, meaning that although prices have been slow to move upwards, they also haven’t gone down as far as the likes of Sydney during the 2017-19 credit crunch.
Unfortunately for Melbourne, their recent spike in coronavirus cases and subsequent lockdown puts their recovery behind others. In addition, Westpac forecasts their downturn to be greater in magnitude than other cities prior to the upswing. As we have been saying since the pandemic began, now is certainly not the time to be contemplating selling. If you don’t sell, a brief correction, followed by a speedy recovery, will be of little consequence to you… like softly swerving around a pothole.
It is important to note that not all parts of our major cities are following the above-mentioned trends. Although Sydney and Melbourne have experienced median price corrections, many submarkets have actually experienced growth. The median unit price in Footscray, for example, has increased by $23,000 since the beginning of the year according to REA data. Be mindful of this when applying citywide analyses to your individual asset.