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TIP: prices could rise 20pc over next two years, investors set to return, mortgage growth still low

Cheap money and limited stock pushing prices faster

After a weekend of auction results not seen since the 2017 peak of the housing boom, today we've heard property values increased 1.6 per cent in Sydney and 1.4 per cent in Melbourne during August alone. CoreLogic's hedonic home value index put national growth at 0.8 per cent last month, the first time the index has headed north since October 2017.

CoreLogic has warned Sydneysiders in particular to not get too excited given prices are still down 13.3 per cent from their peak. But economist Stephen Koukoulas is having none of that; he's tipping growth just shy of 20 per cent due by end 2021 due to a confluence of factors including increasing population, projected household income growth, limited new construction and official interest rates hitting half a per cent.

(Not that apartment stock levels are going to be a problem in Brisbane, at least. PRDnationwide has released figures showing new project starts have increased 71 per cent this year.)

These magical conditions are tipped to entice investors back into the market, especially with CoreLogic now confirming national rental yields currently sit at 4.1 per cent. We're yet to see investors start pushing their way back in-force, but CoreLogic's Cameron Kusher reckons their return is imminent.

Even the NSW government is being urged to take advantage of low rates, and borrow to speed up infrastructure projects planned for the state. The Committee of Sydney is concerned things are moving too slowly to build the comprehensive transport network required to meet population growth demands, and that the multi-decade infrastructure development schedule needs to be stepped up.

Any reluctance Macquarie Street may feel toward taking up this advice is also being felt by the broader market. Home prices are on the rise, but mortgage growth is not - at least according to figures for the first half of the year, which had take-up of home loans at record lows. We're yet to see what Q3 looks like.

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