Key Points
- National property prices in Australia are predicted to increase by up to 5 per cent in 2023.
- Australian home prices have already risen by 2 per cent since the start of the year.
- Some forecasters have predicted the Reserve Bank of Australia's series of interest rate rises are nearing a peak.
National property prices are expected to increase by up to 5 per cent in 2023, having already lifted more than 2 per cent since the start of the year.
The strongest growth is expected to be in Perth with growth of between 4 and 7 per cent, according to a report by REA Group.
Sydney and Adelaide property prices are forecast to increase by between 3 and 6 per cent, while Brisbane is heading for between 1 and 4 per cent growth.
Melbourne prices are predicted to grow at a slower rate of up to 2 per cent, although they might record a small dip by the end of the year.
The forecasts are based on a prediction the Reserve Bank of Australia’s (RBA) series of interest rate rises is nearing its peak.
On Tuesday, the RBA board decided to amid signs inflation is cooling — although RBA governor Philip Lowe warned it is "still too high".
The Australian Bureau of Statistics' most recent data from the June quarter showed inflation dropped from 7 per cent to 6 per cent, but it's still well above the RBA's 2-3 per cent target range.
The author of the REA Group report, Cameron Kusher, said a limited supply of properties for sale remained a key factor contributing to buyer competition and price growth.
"We saw price increases despite rising interest rates and reduced borrowing capacities and anticipate moderate price increases to continue over the coming months," he said.
Kusher said the outlook for 2024 was less clear with a large cohort of fixed-rate borrowers' mortgages set to expire from current interest rates of around 2 per cent and reset to around 6 per cent.
"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," he said.
"At this stage, we are forecasting modest price growth in 2024."
While forecasters are split on whether interest rates will be raised any further, AMP senior economist Diana Mousina told SBS News that based on the RBA’s past hikes and Governor Lowe’s latest inflation concerns, “we're not out of the woods yet".
