Supercharged Housing Recovery
The supercharged housing recovery is the fastest rebound in over 40 years, says Matthew Bunny an Economist in a recent report released by Bank SA.
The report states:
- Dwelling prices have recovered from the COVID-19 recession faster than any other major economic downturn in the past 40 years. Prices bounced back to their 2020 peak within a mere 8 months. Following the recessions in the 80s and 90s, and the Global Financial Crisis, it took prices around 18 to 24 months to return to pre-downturn levels.
- The rapid rebound in employment, ultra low interest rates, government support, elevated consumer confidence and low supply have underpinned the supercharged recovery.
- In previous rebounds, price growth slowed or reversed once dwelling prices were 3–8% above their pre-downturn peak. Dwelling prices are already nearly 8% higher than their peak in April 2020. Previous experience suggests that price growth at the pace we have seen over recent months will not be sustained.
- While authorities have underscored that, so far, lending standards remain sound, we expect a tightening in macroprudential policy in 2022.
- We expect 15–20% growth in dwelling prices in 2021 followed by a slower pace of growth in 2022 after prudential controls and affordability constraints kick in. The bottom line is that dwelling prices have further to go but the remarkable pace of growth we have seen in recent months will not continue.