When will Australia crack the $1m median house price?

A property investor has predicted Australia’s median house price will surge to over $1 million in the next three years, as the economic recovery acts as a tailwind for the industry.

Survey results by Custodian have shown that investors have been waiting for good news on the health and economic front, with one in five looking to add to their portfolio over the next 12 months.

However, Custodian managing director JamesFitzgeraldbelieves investors who wait could be paying more, with Australia’s property market likely to grow quickly during the recovery.

"During the global financial crisis of 2009, unemployment rose to 6 percent while house prices increased by 19 percent and 24 percent inSydneyandMelbourne, respectively, between 2010 and 2012,” Mr. Fitzgerald said.

He told investors that history could repeat itself, with the current risk-free rate set by the RBA at a record low.

"The recent drops in interest rates and the RBA extending bonds from the normal three-year term to now five to10 years means banks can now offer three to five-year fixed rate deals at well below2 percent.

"As a result, median house prices in Australia will accelerate to $1 million as early as 2023,” Mr. Fitzgerald said.

Where will investors buy in 2021?

As investors look to take advantage of the record-low interest rates, Australia’s eastern seaboard looks primed for a market boost.

The survey conducted on behalf of Custodian revealed that 22 percent of respondents had put off buying an investment property in 2020 because of COVID.

For those looking to invest next year, NSW was the top pick in 2021, with 33 per cent of respondents planning to buy there, followed by 29 percent in Victoria and 27 percent in Queensland.

About 6 percent were planning to buy in South Australia and Western Australia, 4 per cent in the Northern Territory and 2 percent in Tasmania and the same number overseas.

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Jason Gwerder
Monday, 4 January 2021

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