Westpac sees 9% annual housing price growth difference between Sydney and Melbourne

Australian home prices will have surged 22 per cent by the end of 2021, economists at Westpac now calculate.

They have upgraded their forecast from 18 per cent annual growth.

Their research update advises prices across major cities have risen 17 per cent to September and are on track for a 1.5 per cent rise during October.

The biggest growth will be 27 percent in Sydney, followed by Hobart on 25 percent and Brisbane on 22 percent.

Melbourne will see an 18 percent gain during 2021.

Westpac’s Bill Evans and Matthew Hassan expect the reopening after lockdowns in NSW and Victoria to trigger boosts that more than offset any initial drags from recently announced macro-prudential measures.

“This strong momentum will carry into 2022. However, the pace of gains is expected to slow, levelling out over the course of next year before moving into a correction phase in 2023.”

Price growth is expected to slow to 8% in 2022, up from its previous forecast of 5%, with most of that increase loaded into the first half of the year.

Brisbane will lead the 2022 growth with 10 percent price gains tipped by Westpac.

“As we move into 2023, the impact of the RBA’s tightening cycle will weigh more heavily on housing markets as borrowing capacity is impacted directly and as sentiment turns,” Evans and Hassan said.

They expect the housing market to dip 5 per cent in 2023.