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International consulting and accounting firm KPMG has released a study predicting the effect of the pandemic on house prices in Australia.
The firm, which predicted a 2021 housing boom back in early 2019, said the pandemic would likely cause Sydney properties to be worth 11% more by 2023 than they would have been if COVID hadn’t occurred. That would equate to an extra $125,000 for the average house, according to the report.
KPMG forecast a similar percentage hike in Brisbane, with house prices likely to be worth an extra $60,000. Melbourne properties were predicted to be worth an extra 4%, bringing the average home price up by $30,000.
The COVID effect – how much more a house will cost because of the pandemic (2023)
KPMG’s ‘Covid price premium’
% increase due to Covid by 2023
But how does KPMG put this price premium at COVID’s door? According to the accounting giants, it all comes down to the pandemic-fueled bank rate cuts. The RBA cash rate of 0.75% plummeted to just 0.1% during the pandemic, while historically low fixed mortgage rates of less than 2% have proven to be the perfect foil to plummeting immigration numbers. Add that to the momentum provided by the huge wave of FOMO driving buyer demand, and Australia’s favourite past-time of property speculation is alive and well – even in the midst of a global pandemic.