The continued strength of the property market has bank economists predicting home prices will increase 22% by the end of the year.

Westpac economists had initially forecast an 18% increase, but current market conditions have prompted them to revise that figure to 22%. Property prices across the major capital cities have increased, on average, by 17% in the 12 months to September and are on track to increase another 1.5% in October.

Westpac predicts the end of the Melbourne and Sydney lockdowns will lead to further upward pressure on prices. Chief economist Bill Evans says reopening will offset any dampening of prices caused by APRA moves to rein in lending. He tips price growth to continue into 2022, although the pace of growth may slow.

Westpac is predicting an interest rate rise in early 2023, despite the Reserve Bank confirming that it does not expect to increase rates until 2024.