House prices to lift by up to 5% this year – PropTrack

Australian house prices are anticipated to increase between 2% and 5% by the end of 2023, based on a prediction that the cash rate is nearing the peak of the rate hiking cycle, according to REA Group’s latest PropTrack report.

The PropTrack Property Market Outlook August 2023 Report, a biannual report combining a comprehensive analysis of the residential property market with an outlook for the year ahead, forecast property prices to increase by up to 5% nationally over the remainder of 2023, with greater growth projected in the larger capital cities.

“The property market has seen a turnaround this year with six consecutive months of property price growth,” said Cameron Kusher (pictured above), PropTrack director of economic research and report author. “Limited supply of available properties for sale was a key factor contributing to buyer competition and price growth.

“National property prices increased 2.3% over the first six months of 2023, signalling a shift in the housing market and reversing the declines experienced in the prior six months. We saw price increases despite rising interest rates and reduced borrowing capacities and anticipate moderate price increases to continue over the coming months.”

Across the combined capital cities, prices are predicted to increase by between 3% to 6%.

All capital cities are expected to see positive price growth over the remainder of 2023, with the exception of Hobart (-3% to -6%) and Darwin (-3% to 0%). Perth will likely see the strongest growth, of between 4% to 7%, followed by Sydney and Adelaide (both 3% to 6%), and Brisbane (1% to 4%). Melbourne (-1% to 2%) and Canberra (0% to 3%), meanwhile, will likely see a less pronounced growth than other capital cities.

“The outlook for 2024 is much less clear with a large cohort of fixed-rate borrowers’ mortgages set to expire from current interest rates of around 2% and reset to around 6%,” Kusher said.

“Interest rate changes act with a lag, and as such, the possible impact of higher repayments on these borrowers won’t be seen until 2024. At this stage, we are forecasting modest price growth in 2024.”

Below are some additional report findings:

• In June, preliminary sales volumes were 3.7% lower year-on-year but were consistently higher than over any of the final six months of 2022, indicating that sales volumes will likely remain quite strong over the coming months.
• Across the capital cities, the volume of total stock for sale remained at historical lows, with the total number of properties listed for sale on realestate.com.au down 9.6% YoY in June.
• Nationally, the volume of new stock flowing to market has trended lower since its peak in March 2022, sitting 14.8% below June 2022 levels in June 2023.
• There are now some signs that vendors are increasingly prepared to list. A lift in new listings may slow the expected price increases.
• Buyers are competing for a relatively low volume of stock resulting in the number of enquiries per listing on realestate.com.au, up 10% year-on-year in June.
• The median number of days a property was listed on realestate.com.au before selling in June remained unchanged from the previous month at 43 days, up four days on the prior year.

For more information and to view the full report, please visit the realestate.com.au website.

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