• One in five Australians are looking to buy a property in the next 12 months, a new Finder survey shows.
• It comes as confidence returns to the market with the big banks expecting prices to stabilise and even grow into next year due to growing demand.
• While interest rates remain at a record low, the Reserve Bank of Australia (RBA) meanwhile has disputed that a housing bubble is emerging.
• Visit Business Insider Australia’s homepage for more stories.

The property market has so far seemed to not only skirt the worst of the pandemic, but actually overcome it.

Uncertainty among buyers has largely dissipated with the latest Finder survey showing that one in five Australians are eager to buy property in the next 12 months.

In part, confidence has been buoyed by the fact that the worst case market scenarios have so far been avoided.

Predictions by major banks of national price falls between 10% and 20% now appear to have been overblown. Prices fell across capital cities by just 2.3% on average, but were largely contained to Sydney and Melbourne.

With Sydney again on the rise, and with Victoria expected to rebound as its economy reopens, it could be the bottom of the market. The big banks have changed their tune.

Speaking at the AFR Banking and Wealth Summit on Wednesday, big four bank CEOs agreed that record low interest rates would help steady the ship.

“It feels like there is a lot of demand, there is certainly a lot of application demand. It will be interesting to see if that flows into [2021],”Commonwealth Bank CEO Matt Comyn said, forecasting 5% price growth.

While often spoken about in monolithic terms, the pandemic saw the Australian property market diverge greatly. While Melbourne dragged national values down, other capital cities proved far steadier, and regional prices actually thrived, rising 1.7% since March.

The trend away from inner city areas would continue, NAB boss Ross McEwan said.

“[Employees] can buy an apartment an hour or so away and work without all the commute and carry on,” McEwan said. “Of course you’ve seen the reverse going on in some apartment buildings where rentals are dropping therefore the price of those apartments will drop.”

McEwan added that NAB still anticipates prices to fall a little further before finding their footing.

A record low cash rate of 0.1% will help it do that, combined with record stimulus, a largely contained virus, and growing confidence.

Speaking at The Australian’s Strategic Forum across town, RBA Governor Philip Lowe downplayed the risk of a housing bubble emerging as a result, noting “population dynanmics have changed a lot”.

“[We’ll have] the lowest population growth in more than a century, vacancy rates for residential property, particularly apartments, are rising and rents are falling, so it doesn’t feel like at the moment that the fundamentals are there to drive an unsustainable increase in housing prices,” Lowe said.

“If that were to occur and debt was to increase very quickly as well which I think is unlikely, we know from the experience of recent years that the macroprudential instruments can curtail the growth of debt in a stabilising way.”

“So it’s an issue we’re watching carefully but I’m not particularly worried about it at the moment.”

With population growth projected to plummet over the next 12 months, falling demand for housing is expected to depress house price growth, as well as the broader economy.

“If we don’t go back to the previous rates of immigration then we will have to get used to slower rates of growth in our economy,” Lowe said.

“The country has benefitted tremendously from this immigration and it’s a matter for the government and the parliament to decide whether we want to continue on that track or go on a different one. I think we’re better off staying on the track we’re on but that’s an issue for the government.”

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