Australian home prices are projected to increase by approximately 5 to 6 per cent over the next two years, buoyed by reduced borrowing costs that are expected to stimulate home sales. However, Reuters’ recent poll of 15 property analysts suggests that affordability pressures could moderate these gains. The survey, conducted between August 18 and September 8, forecasts a 5 per cent rise in home prices this year, an increase from the 4 per cent and 3.7 per cent predicted in the second and first quarters, respectively.
While a 5 per cent increase is modest compared to previous booms, it poses challenges for first-time buyers aiming to enter Australia’s expensive housing market. The median home price is currently nearly eight times the average annual income. Major capital cities, including Sydney, Melbourne, Adelaide, Brisbane, and Perth, are expected to experience home price increases of between 4 and 7 per cent this year and the next.
This projected growth is likely to further strain affordability in a market grappling with limited supply of new homes. Property consultancy, CoreLogic, reported that the national median home value increased by approximately 4 per cent from $814,293 in January to $848,858 in August. This figure remains elevated compared to historical standards.
Analysts responding to additional questions regarding purchasing affordability over the next 12 months were split. Five analysts anticipate modest improvements in affordability, while four predict a worsening situation.
