CBA has revised its 2020 residential price targets, noting the strong recovery in housing demand over the past four months in Sydney and Melbourne.

The bank is now forecasting a 6.1 per cent increase in the national dwelling price by the end of 2020-about twice as much as it predicted back in July.

It is projected that Sydney and Melbourne will outperform the national average, with prices rising by 7% and 8% respectively, powered by high population growth and low unemployment.

Home prices in Brisbane and Canberra are set to rise by 4%, and home prices in Adelaide and Hobart by 3%.

Perth prices are also expected to rise after reporting price declines over the past five years; albeit a small 2.5 percent.

CBA had forecast national home prices to rise by only 3% in July, Sydney by 3.8% and Melbourne by 3.1%.

“Our initial dwelling price targets were achieved early,” said Gareth Aird, senior economist at the CBA. “The rebound in demand, especially in Sydney and Melbourne, was phenomenal.”

Mr Aird said that they did not expect a V-shaped price recovery back in July due to lingering credit restrictions, concerns about excess residential stock and weak buyer feeling following the recent downturn.

National home prices have risen sharply since then. Data from CoreLogic showed an increase of 1.4% in October, 1% in September and 1% in August.

Auction clearance rates are currently 70.6 per cent, and there has been a marked increase in the credit flow.