Melbourne house values are predicted to rise 9 per cent in the next 12 months, more than any other Australian capital.
And while the Reserve Bank of Australia (RBA) on Tuesday announced the cash rate would remain strong at 0.10 per cent, many homeowners fear interest rates could soon rise.
The latest Finder RBA Cash Rate Survey, which polled 40 experts and economists, has tipped Melbourne house values to rise $64,014 by July 2022.
The report estimated it would bring the city’s average home price to $817,114.
Perth, Brisbane and Sydney are expected to increase 8 per cent in the same period, with house values in Sydney tipped to increase by a whopping $76,619.
Finder head of consumer research Graham Cooke said Covid-19 related lockdowns in Victoria and NSW were having little impact on house sales.
“In both Sydney and Melbourne, the number of houses sold per month remained relatively flat
through 2020 and early 2021, before skyrocketing when lockdowns were lifted,” Mr Cooke said.
“After lockdowns were eased, the number of properties being sold increased by around a quarter.
“In other words, while lockdowns didn’t dampen the housing market much, the ending of them lit a fire that is still going.”
Despite this, 53 per cent of homeowners are concerned about interest rates rising in the near future, further research from Finder shows.
Of those surveyed, 15 per cent said they might not be able to make repayments if they do.
“Low interest rates have encouraged many buyers to purchase earlier than they otherwise might have for fear of missing out,” Mr Cooke said.
“But not all of them will have budgeted for their monthly repayments to go up if or before the cash rate increases.”
Bendigo Bank head of economic markets and research David Robertson predicted the RBA would hold off on rate hikes until early or mid-2023.
He said ongoing lockdowns in NSW, the ACT and Victoria “highlight the need for more government support measures to help households and businesses through to year-end when an 80 per cent adult vaccination rate will allow mobility and the economy to run near full capacity”.
Mr Cooke added Australia was “almost certainly heading for another recession”.
“How deep it will cut, and how quickly we will recover, will depend heavily on when the current lockdowns end and how quickly interstate and international travel are restored,” he said.
The research also found the average monthly mortgage payments in Melbourne are worth 57 per cent of a typical worker’s after-tax earnings.
That figure is the second highest in the country, behind Sydney‘s 76 per cent.