House prices

House prices were expected to fall, now they’re tipped for a record rise. What’s going on?

PHOTO: House prices in Australia jumped by 2.1 per cent in February the biggest month-on-month gain in almost 18 years. CREDIT: BLOOMBERG

Property prices are going to fall. Home values are going to rise. Apartments will be sold on the cheap but houses will be in high demand. Regional areas will outpace capital cities.

All of the above predictions has been made by reputable forecasters at some point during the last 12 months as housing market researchers frantically grabbed at disparate data-points in an attempt to make sense of the pandemic’s effects on the economy and, ultimately, the psyche of home buyers and sellers.

The consensus at the height of the coronavirus outbreaks was that there would be a deep and painful fall in home values in the most prized Sydney and Melbourne real estate markets, which would’ve shaved hundreds of thousands of dollars off the value of a median house. This type of fall could force some home owners into negative equity, where their debt is larger than the value of their asset, and weigh heavily on household spending with a worrying knock-on effect to other parts of the economy.

As it turns out, this expectation could not have been more wrong.