Experts Release Updated Sydney Property Price Forecasts

All four of the big banks have revised their forecasts for Sydney’s property prices based on the market’s stronger than expected performance so far this year.

We take a look at the experts’ most recent predictions for Sydney house prices over 2021 and what they mean for buyers and sellers.

The rise of Sydney property prices this year, which has been nothing short of astronomical, has outstripped even the most optimistic market predictions. In light of this stronger than expected growth, banks and economists have been releasing revised forecasts for the Sydney property market for 2021 and beyond.

What are the big banks saying?

ANZ

ANZ released its updated forecast at the end of August 2021. They are tipping Sydney property prices to spike by a total of 23 per cent by year’s end. The bank’s senior economist Felicity Emmett admitted that they had expected price growth to have slowed by now; instead, prices have continued to climb, even through months of lockdown. They pointed to indicators like auction clearance rates and sales to listings ratios as proof that the market remains very tight but warned that high prices were beginning to dampen buyer demand.

CBA

CBA’s revised predictions were released earlier in August, and they are forecasting 24 per cent growth for Sydney house prices during 2021. CBA’s head of Australian economics, Gareth Aird, observed that both buyers and sellers have retained confidence in the Sydney property market, especially compared to the early days of the pandemic. That has helped house prices maintain their momentum through the lockdown.

Like ANZ, CBA is predicting that declining affordability will slow the market in 2022 but say that any real disruption won’t occur until interest rates are raised.

NAB

NAB’s latest forecast, released at the end of July, anticipates a 21.6 per cent rise in Sydney property prices over this year. The prediction is underpinned by the stronger than expected growth we saw in the first part of the year and NAB’s expectation that dwelling prices would maintain this momentum until the end of the year. They are forecasting a 3.1 per cent price rise in 2022, citing the same belief as ANZ and CBA that high prices will start to curb buyer activity as time goes on.

They also anticipate that house prices will continue to rise at a faster pace than unit prices, given that units and apartments have been impacted by the slowdown in population growth caused by the closure of international borders. Interestingly, we’ve noticed that the gap between house and unit price growth that has opened up this year might already be starting to narrow.

Westpac

The final bank of the big four, Westpac, is tipping a 22 per cent rise in dwelling values for Sydney in 2021. Westpac released its latest forecast at the end of July, and, like its peers, it notes that the Sydney lockdown has not dampened the market or subdued buyer demand. It is forecasting a further 5 per cent lift in 2022 before higher interest rates and affordability issues possibly slow things down.

What are the economists saying?

The Sydney Morning Herald / The Age Scope survey, released in early August, gathered housing market predictions from 18 leading economists, among them representatives from CBA, ANZ, and Westpac. On average, they expect a rise of 16 per cent in property prices in Sydney in 2021 - a slightly more conservative forecast than that of the banks. They also predict Sydney property values will rise by another 4 per cent in 2022, which is in line with what many of the banks have predicted.

A note of caution

Recently, some have expressed concern about the nation’s rising household debt levels linked to property prices. The RBA has stated that they are continually assessing whether to restrict commercial lending standards to ensure that homebuyers don’t get in over their heads, and the CBA’s chief executive Matt Comyn has said that the bank is increasingly concerned about rising household debt and property prices.

What does this mean for buyers and sellers?

It’s a good time to sell. With rising vaccination rates and a relaxing COVID restrictions on the horizon, spring is in the air and consumer confidence in the Sydney property market is strong. Buyer demand continues to outstrip supply, and available properties are being snapped up quickly.

If, on the other hand, you’re looking to buy Sydney property, there’s no reason to wait. With economists predicting that prices will continue to rise for some time yet, getting into the market now could well prove to be more cost-effective than sitting on the fence.

Are you thinking about buying or selling in Sydney’s East? We’re running at full capacity, in line with COVID restrictions. Get in touch today.

Download our 2018/2019
Eastern Suburbs Market Report

Next Insight

Apartment Prices Surging Due To Affordability Gap