Australian dwelling prices will increase by almost 23 per cent by the end of the 2021 calendar year, according to a revised forecast by National Australia Bank (NAB).
The data, which was included in the NAB Residential Property Survey Q3 2021, stated that, according to the major bank’s economists, the average dwelling price in an Australian capital city will rise 22.7 per cent by the end of this year.
This figure will then languish to a 4.9 per cent increase at the conclusion of 2022.
This data contrasts NAB’s earlier predictions, published in July, that stated the conclusion of 2021 would see a national growth of 18.5 per cent.
According to the major bank, this revision was based on “stronger than expected outcomes in months”, alongside a small upgrade to its expectations.
“Overall, that sees a very strong print for house [prices] in 2021 but a sharp sling in 2022 as the impact of lower interest rates fades and affordability constraints begin to bind,” the report added.
Furthermore, NAB has also expressed that, in relation to this new forecast, it expects the economy to rebound as Australia begins to reopen, with an expected increase in household consumption, business and dwelling investment, as well as government spending.
Also predicted to arrive is a “solid bounce” to the labour market, with unemployment peaking at 4.9 per cent before gradually declining to almost 4 per cent by the end of 2023.
“This will see wage growth gradually lift, and then begin to flow through to consumer price inflation,” the report stated.
“However, the lags are likely to be long and therefore we do not see inflation back within the [Reserve Bank of Australia]’s target bank until H2 2023 and for the cash rate to rise in early 2024.”
The report also suggests that there is a likelihood further macroprudential policies to come forward that in turn could impact lending or the property market, echoing a similar position shared by Westpac earlier this month in its amended forecast.
Westpac’s dwelling price forecast now expects a national 22 per cent increase by the end of the calendar year, followed by an 8 per cent increase by the end of 2022 and a 5 per cent increase by 2023.
NAB’s altered estimation subsequently has changed the expected increase of dwellings in each capital cities, with Hobart, Brisbane and Sydney now predicted to have a surge of 28.4 per cent, 23.2 per cent, and 27.5 per cent by the end of the same period.
The major bank’s previous forecast placed the three cities at 23.5 per cent, 19.5 per cent, and 21.6 per cent respectively.
The estimated growth in Melbourne, Adelaide, and Perth, however, has remained similar to what was previously reported, with the three cities being linked to increases of 18.8 per cent, 20.4 per cent, and 14.5 per cent.
NAB’s previous prediction placed these at a rise of 17.6 per cent, 17.4 per cent, and 11.6 per cent.
However, by the end of 2022, each capital city will see a relatively similar increase, with Hobart expected to experience the lowest at 4.3 per cent, and Sydney the highest at 5.4 per cent.
A decrease in the index
The NAB Residential Property Survey Q3 2021 also expressed that the NAB Residential Property Index saw an 11-point dip, lowering from the previous survey high of +71 to +60.
According to the major bank, this is tied to the coupling of easing house price growth and sales with a decline in building approvals.
But while in the space of one quarter, confidence levels have dropped by 11 points, this is also predicted to remain relatively stable over the next two years, reaching 62 over 12 months, before declining to 59 over 24 months.
This however is not distributed equally across the country, with Victoria, Queensland and Tasmania to be below average by the end of the two years.
According to the current survey, Tasmania currently sits on 50 points, while Victoria and Queensland sit on 44 and 75 respectively.
By the end of two years, Tasmania is predicted to be on 39 points, with Victoria on 50 and Queensland on 57.
Comparatively, the ACT is expected to be at 100 points by the conclusion of both one year and two years.
[Related: NAB predicts 18.5% dwelling price spike in 2021]