Australia is on the “cusp of a housing boom”, according to the Commonwealth Bank, which has forecast house prices will rise 16% over the next two years.

An economics issues paper by the bank’s head of Australian economics, Gareth Aird, predicts national house prices would rise 9% in 2021 and a further 7% in 2022. The other major banks have also predicted big price rises this year and next.

While Sydney (7.5%) and Melbourne (7%) are tipped to rise moderately, price growth outside of the two largest capitals is expected to really climb. Darwin is predicted to rise 12% this year, Perth 10%, Brisbane 9.5% and Hobart, Adelaide and Canberra all 9%.

It’s a marked turnaround from the dire predictions made during the pandemic’s early days last year, which Aird admitted had taken many in the industry by surprise. “The negative impact that COVID-19 had on Australian property prices turned out to be much more muted than almost any forecaster expected, us included,” he says.