Australian property prices are set to surge by more than $75,000 in some places despite lockdowns sparking a major economic downturn.
There are fears Western Australia and Queensland could cause a national recession by refusing to reopen their borders, even as vaccination rates surpassed 80 per cent.
During the past year, Sydney’s median house price has climbed by 26 per cent to $1.293million, CoreLogic data showed.
The growth has continued, rising by another 1.9 per cent in August despite ten weeks of lockdown.
Financial comparison group Finder surveyed 40 economists, who unanimously agreed Covid restrictions would do nothing to stop property prices from soaring.
Australian property prices are set to surge by more than $75,000 in some places despite lockdowns sparking a major economic downturn (pictured is a house at Green Valley in Sydney’s south-west)
They predicted an 8 per cent or $76,619 surge in Sydney property prices during this financial year, which would take the median property price for houses and units to $1,070,917 by July 2022.
Melbourne property values were expected to climb by 9 per cent, rising by $64,014 to $817,114.
Graham Cooke, Finder’s head of consumer research, said lockdowns had done little to stop home sales, as the Reserve Bank of Australia left interest rates on hold at a record low of 0.1 per cent.
‘The average Sydney homeowner earned more than the median family wage over the last 12 months in property equity alone, and it looks like they are set to repeat that over the next 12,’ he said.
Reserve Bank governor Philip Lowe expected lockdowns in Sydney and Melbourne, as a result of surging Delta case numbers, to cause a gross domestic product contraction in the September quarter.
‘The recovery in the Australian economy has been interrupted by the Delta outbreak and the associated restrictions on activity,’ he said.
There are fears Western Australia and Queensland could cause a national recession by refusing to reopen their borders even as vaccination rates surpass 80 per cent (pictured are road blocks separating Coolangatta on the Gold Coast from Tweed Heads in New South Wales)
‘GDP is expected to decline materially in the September quarter and the unemployment rate will move higher over coming months.’
Westpac chief economist Bill Evans is expecting the New South Wales economy to shrink by 8.3 per cent in the September quarter.
Victoria’s economy was expected to contract by a lesser 5.7 per cent because Melbourne didn’t lock down until August 5, compared with June 26 in Sydney.
Dr Lowe is expecting the economy to recover in the December quarter, starting in October when 70 per cent of the population is likely to be fully vaccinated.
But he cautioned the recovery in late 2021 would be much slower than the aftermath of the 2020 recession, sparked by national lockdowns.
‘As vaccination rates increase further and restrictions are eased, the economy should bounce back,’ Dr Lowe said.
‘There is, however, uncertainty about the timing and pace of this bounce-back and it is likely to be slower than that earlier in the year.
‘Much will depend on the health situation and the easing of restrictions on activity.’
Mr Cooke, however, is more downbeat, predicting a recession in late 2021 as the economy shrank again in the December quarter, as states like Queensland and Western Australia kept their borders shut.
A technical recession occurs when the economy shrinks for two consecutive quarters.
Labor premiers Mark McGowan, from Western Australia, and Queensland’s Annastacia Palaszczuk (pictured) have both indicated they would keep their borders closed even if national vaccination rates surpassed 80 per cent
‘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,’ Mr Cooke said.
‘Unfortunately, that trifecta of freedom will almost certainly not come until next year.’
Labor premiers Mark McGowan, from Western Australia, and Queensland’s Annastacia Palaszczuk have both indicated they would keep their borders closed even if national vaccination rates surpassed 80 per cent.
A recession in 2021, following one in the first half of 2020, would mark the recessions in consecutive calendar years since the early 1980s.