In the middle of last year CBA wrote a report suggesting house prices in Australia could fall by 32 percent in a worst case scenario due to COVID and the economic fallout thereafter.
The media had an absolute field day, taking the report out of context and splashing headlines such as “Property prices to plummet by one third!” or “House prices set to crash 32%!”.
I, in turn, had a field day criticizing the media for such sensationalism.
Clearly they got it very wrong.
Depending on whose stats you believe property prices fell between zero and two percent in Melbourne in 2020. And then things went gangbusters, which no one could have predicted.
Now, just one year later, the banks (most recently Westpac) are suggesting property prices will rise by 20 percent in Sydney and 18 percent in Melbourne by the end of 2022.
That’s a 50% swing in house price predictions in just 12 months, if you believe the headlines.
But this time the banks might actually be right.
It seems we are already well on our way to reaching 18 percent growth in house prices since the middle of last year.
My best guess is that our market (Stonnington) is up at least 10-15 percent since the third quarter of 2020, with much of that growth coming in Q4 2020 and Q1 2021.
Prices have continued to rise steadily since then, and look set to do so until at least the end of the year.
It’s not unreasonable to assume that from trough-to-peak, Melbourne house prices will be up by 18 percent by the end of 2021.
The much bigger question is what will happen in 2022? And that’s anyone’s guess…
The banks haven’t exactly been nailing their longer term predictions lately.
Feature Image: 49 Jordan Street, Malvern