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Housing boom forecast next year, but Jobkeeper will be ‘essential’

Housing boom forecast next year, but Jobkeeper will be ‘essential’

Home values are forecasted to bounce back next year posting strong gains across the country, according to a research firm, bucking a period of falling prices and circumventing the pitfalls of a pandemic.

Properties across the country are expected to grow by 5 to 9 per cent in value in 2021, SQM research claims, provided the cash rate holds, a third COVID wave is contained, JobKeeper is extended and a vaccine is progressively rolled out.

The scenario, a base analysis that’s one of four in the firm’s Christopher’s Housing Boom and Bust report, anticipates the largest gains will be made in Perth, Sydney and Adelaide.

“The national housing market has responded to the unprecedented economic stimulus packages as well as record low lending rates,” Louis Christopher said, managing director of SQM Research.

“Auction clearance rates have lifted since mid-year and various dwelling price measurements have started to record price rises.

“It is likely that the housing market will gain further momentum on the back of increased investor activity, especially from those who seek some sort of income yield.”

Dwelling values: actual versus projections, as per SQM Research


Scenario 1

(base case)


Scenario 2


Scenario 3


Scenario 4

City/Region· 12 months to


All Dwellings

Source: Corelogic

· Cash Rate unchanged at 0.1%

· QE Expands

· 3rd COVID-19 wave contained via more lockdowns

· JobKeeper extended to Sept Qtr 2020

· Progressive roll out of Covid vaccine

· JobKeeper phased out as planned (March)

· JobSeeker returned to base

· QE unchanged. Rates unchanged

· Progressive roll out of Covid vaccine

· 3rd COVID-19 wave contained via more lockdowns

· Better than expected roll out of Vaccine in 1st half of year

· Bounce in employment

· No more lockdowns, State borders remain open, regional hub open

· JobKeeper phased out as planned

· QE scaled back after mid-year

· No Vaccine released in 2021

· International/State borders remain closed

· Negative cash rate

· JobKeeper/Seeker extended to end of year



8 to 12%

8 to 12%

10 to 15%

3 to 6%



4 to 8%

4 to 7%

5 to 9%

3 to 6%



6 to 9%

3 to 6%

3 to 6%

6 to 9%



2 to 6%

-5 to 0%

-1 to 4%

-3 to 3%



7 to 11%

0 to 4%

3 to 7%

4 to 8%



6 to 10%

1 to 4%

-2 to 2%

4 to 8%



3 to 7 %

-2 to 3%

3 to 6%

1 to 3%



5 to 9%

5 to 9%

4 to 7%

2 to 6%

Capital City Average (weighted)


5 to 9%

0 to 4%

2 to 6%

2 to 6%

The forecasts come after the housing market posted gains in every capital city for the first time in seven months, climbing out of a five month streak of falling prices.

Government stimulus will be essential

The government’s JobKeeper payment will be essential in keeping the economic recovery afoot, SQM Research said, by subsidising people’s employment and keeping housing demand high.

“An extension of JobKeeper is regarded as essential for the ongoing momentum of the housing recovery, which appears to have formed from the end of … 2020,” Mr Christopher said.

“If JobKeeper is scaled back too prematurely, the housing market recovery in Sydney and Melbourne could stall.”

The JobKeeper payment, due to expire on 28 March 2021, effectively subsidises the pay of staff members for eligible businesses, a move intended to clot the unemployment surge experienced at the beginning of the pandemic -- where 932,000 people were put out of work.

The majority of these jobs have since been recovered -- about 232,000 people remain out of work as of October, according to the Australian Bureau of Statistics (ABS).

Meanwhile, containment of the pandemic has prevented the unemployment rate from reaching worst-case projections.

“When we met three months ago, I was saying the unemployment rate in Australia could get to 10 per cent,” Philip Lowe said, the head of the Reserve Bank of Australia (RBA), to a parliamentary inquiry yesterday.

“Now I think somewhere in the sevens will be the peak … It's not changing the medium term, but the bounce back has been quicker than we'd hoped.”

Sydney and Melbourne are most vulnerable

Whereas houses grew in value by 1.1 per cent in the three months to November, unit values in capital cities actually dropped by 0.6 per cent, according to CoreLogic.

Sydney and Melbourne unit values have been particularly affected, where international border closures have disappeared a key demographic of renters: international students and migrants.

The weakened demand in the rental space of these capital cities presents an additional hurdle that needs to be overcome before the property market can return to growth, Mr Christopher said.

“This new recovery will be one of the more speculative rises seen in some time,” he said.

“Let’s keep in mind unemployment remains elevated and net migration is expected to be negative next year.

“We have a surplus of inner-city units in our two largest cities.

“And if there was another negative macro event in 2021, there is not much room left to cut lending rates further.”

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.



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