Australia’s property market has shown remarkable resilience in spite of 12 cash rate increases and grim forecasts made at the onset of the COVID pandemic. And now experts anticipate house prices will rise even further, with some areas forecast to gain another 6 per cent before December 31.
Economists on the panel of Finder’s latest RBA Cash Rate Survey have projected a 5 per cent rise in home prices in both Sydney and Brisbane by the end of the year.
More tempered growth is expected in Canberra and Adelaide at 4 per cent, and Melbourne at 3 per cent. Perth tops the list, with an anticipated 6 per cent increase in the final quarter of 2023.
This upward trend is expected to bring the average home price to $1,124,957 in Sydney, $804,809 in Melbourne, $715,036 in Brisbane, $818,328 in Canberra, $678,073 in Adelaide, and $572,431 in Perth, with Hobart and Darwin following with $673,797 and $498,108, respectively. This is based on Finder’s weighted average of house and unit prices from CoreLogic.
This follows a period of modest stability, with the weighted three-month change in prices up 0.4 per cent for houses and 0.1 per cent for units when compared to 12 months ago.
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Why are property prices on the rise?
The panel attributes this growth to a number of factors, including a scarcity of housing supply and a burgeoning population.
GSFM's Stephen Miller pinpointed the housing supply shortfall and escalating population growth as primary drivers. This sentiment was mirrored by Nicholas Frappell from ABC Refinery, Alan Oster from NAB — who underscored the sustained demand — and Stella Huangfu of the University of Sydney — who highlighted NSW’s new legislation allowing partial or full exemption of stamp duty on properties valued up to $1 million as a driver for apartment sales.
The suburbs with the highest growth potential
Finder’s recently updated Property Investment Index uses a whole range of data to indicate the suburbs in each capital with the highest growth potential.
As of October 2023, the following suburbs have the highest potential for price growth:
Housing cost stress spikes
Rising property prices aren’t good news for potential first-home buyers, who have been hit with a double-whammy of sky-high interest rates and slowly rising prices. Data from Finder's Consumer Sentiment Tracker paints a concerning picture too, revealing heightened stress levels around housing costs for both existing homeowners and those renting in the past couple of years.
Rising rents make it even more of a challenge for those eager to get their foot on the bottom rung of the housing ladder because it makes it even harder to gather a deposit.
But it’s not all bad news for property buyers and savers
For anyone eager to start the journey, there is some good news. The high interest rate means that savings accounts are now offering better value than ever before, with ING offering 5.5 per cent interest on balances up to $100,000.
UBank isn't far behind, offering a solid 5.0 per cent with no balance cap. While there are conditions, like routing your salary into the linked transaction account, these opportunities often trump the fleeting high-rate offers dangled by some major banks.
Finder’s research shows that those with higher savings buffers have fared better than those without in the cost-of-living crisis.
So, if there's a core message to emphasise in this article, it's this: regardless of your housing aspirations, it's never too late to start saving.