Weak rental markets will weigh on inner city units in Melbourne and Sydney: Shane Oliver

Australian home prices are likely to rise another 5% to 10% this year and next, according to Shane Oliver at AMP Capital. "Prices were being boosted by record low mortgage rates, government home buyer incentives and the recovery in the jobs market. "But the stop to immigration and weak rental markets will likely weigh on inner city areas and units in Melbourne and Sydney. "Outer suburbs, houses, smaller cities and regional areas will see relatively stronger gains in 2021," he forecast. His comments came after housing finance rose to a new record; and house prices rose at their fastest pace in nearly 18 years. "While home building approvals fell sharply this reflects volatility driven by the HomeBuilder incentive scheme with dwelling construction still on track for strong growth. "There was some other good news too with the share of housing and small business loans in payment deferrals collapsing further to just 1.8% and 1% respectively in January," he added.