Australia Home Prices Likely To Rise 5.0% This Year
Property analysts continue to forecast a 5.0% rise in Australian home prices in 2024, a Reuters poll showed, brushing off central bank comments since the last poll three months ago that leave open the possibility of an interest rate hike before year-end. After a 25% surge during the pandemic, average house prices tumbled 9% from their peak but clawed back almost all of that last year even though the Reserve Bank of Australia hiked the cash rate to a 12-year high of 4.35%. The bank is widely expected to hold there well into the second half of this year. The average price of a home is too expensive for many first-time buyers. A low jobless rate, high wage growth and spike in immigration are likely to continue driving prices up, though by less than in recent years. Since the 2008 financial crisis, home prices have nearly doubled. Average home prices are likely to rise 5.0% this year, showed the median forecast of a Feb. 16-28 Reuters survey of 14 property analysts, unchanged from a December poll. Prices are forecast to increase 5.0% in 2025, versus 3.9% in the previous poll. "The housing market in Australia seems to be cooling. There was a very strong year in 2023 with 9.1% price growth in capital cities, but we don't expect that to be repeated. The interest rate staying at 4.35% for most of the year will put a limit on housing price growth in 2024," said ANZ senior economist Adelaide Timbrell. "Housing prices will still grow because people will have more borrowing capacity through the year due to tax cuts and rate cuts. And there's still strong population growth and a backlog of building homes that needs to be filled." Under an amendment effective July 1, high-income earners will have to pay more tax while low-income households battling a rising cost of living will pay less. Rock-bottom interest rates during the pandemic and a scarcity of housing supply fuelled already-expensive housing prices and compelled aspiring first-time home buyers to surrender to the rental market.
Tags : Housing prices jobless rate ANZ senior economist Adelaide Timbrell.