Home Economy News Australia home prices likely to rise 5.0% this year and next: Reuters poll

Australia home prices likely to rise 5.0% this year and next: Reuters poll


Australia home prices likely to rise 5.0% this year and next: Reuters poll By Reuters

Breaking News



Published Feb 27, 2024 10:23PM ET

© Reuters. A ÒFor SaleÓ sign is displayed in front of a row of houses in the suburb of Carlingford, Sydney, Australia February 1, 2019. Picture taken February 1, 2019. REUTERS/Tom Westbrook/file photo

By Devayani Sathyan

BENGALURU (Reuters) – 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.

When asked about affordability for first-time homebuyers over the coming year, six of 10 analysts said it will worsen. The remaining four said affordability will improve.

“Housing has increasingly become a luxury good, with household affordability around record low levels. This will put a downward force on homeownership rates,” said Barrenjoey senior economist Johnathan McMenamin.

“Prior to the pandemic, you had a situation where you still had to earn more than the median income to enter the housing market. But now it’s shifted further up that income distribution. The pool of potential buyers has narrowed in the current cycle and that narrowing will likely lead the pool of rentals increasing as well.”

Five of eight respondents said the proportion of home ownership to renters would decrease over the coming year, while three predicted an increase.

Analysts who said the gap between demand and supply of affordable homes would widen over the coming 2-3 years outnumbered by two to one those saying it would stay the same or narrow modestly.

“Every time housing prices go up more than wages and salaries, the share of homes that are affordable goes down. And we will continue to see that unless there is a huge increase in social housing,” ANZ’s Timbrell added.

(For other stories from the Reuters quarterly housing market polls, click here.)

Australia home prices likely to rise 5.0% this year and next: Reuters poll

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News