Apartment Prices Set to Rise by 9%
Commonwealth Bank economists predict a sharp rise in apartment prices, as banks offer historically low mortgage rates.
“A critical assumption underpinning our forecasts is the cash rate remaining at its record low of 0.1%, which is in line with RBA forward guidance,” CBA's head of Australian economics Gareth Aird said.
Brought on by Australia’s recovery from the pandemic, increased consumer confidence and low interest rates – banks have been flooded with new loan applications by an influx of buyers - with incentives like HomeBuilder and stamp duty discounts also offering confidence to buyers. CBA points out that new lending has lifted sharply, with apartment prices already rising in most capital cities.
In recent months, banks have been offering fixed rates below 2% for the first time ever, and buyers are now racing to secure historically low home loans – with some offering fixed terms for as long as four years.
"Near term indicators of momentum suggest conditions will further strengthen. The increase in new lending is now feeding into higher prices for bricks and mortar.
“The boom is being driven by record low mortgage rates coupled with a V‑shaped recovery in the labour market, they also see a boost in demand from population growth as international borders are reopened,” said Mr Aird.
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