Australia’s Property Market in Recovery with Continued Rise in House Prices Expected

After the property market downturn in 2022, Australia’s property market is now poised for a strong recovery. Property prices across Australia are set to rise and even break previous records in various cities, as revealed by the Domain Forecast Report, penned by Sue Williams, and an analysis by PropTrack’s Eleanor Creagh.

In the report, Domain’s chief of research and economics, Dr. Nicola Powell, predicts that house prices in cities like Sydney, Adelaide, and Perth will reach new highs, with the markets in these cities expected to fully recover from last year’s slump. This robust recovery aligns with the views of the Real Estate Institute of Australia, whose national president, Hayden Groves, shared that they anticipate a continued rise in prices due to a shortage of supply.

“We’ve already started to see prices rising this year, and we’re expecting that to continue, but we’re expecting the recovery to be slow and steady,” said Dr. Powell1. She also pointed out that Sydney is expected to experience the strongest growth rate, driven mainly by the lack of housing supply and an increasing population.

Moreover, PropTrack’s analysis anticipates that national home prices could return to positive annual growth as early as next month and could surpass their previous peak by January 20242. Eleanor Creagh, senior economist at PropTrack, noted that “the housing market has so far avoided the steep falls many expected” and attributed this resilience to stronger housing demand and tight rental markets.

Several Australian cities are expected to witness various growth rates. For instance, Sydney’s house prices are expected to rise from 6 to 9%, reaching a fresh median of $1.62 million to $1.66 million, above the previous peak of $1.59 million struck in March 20221. However, Melbourne, on the other hand, is projected to experience a slower recovery with house prices potentially rising by a maximum of 2%.

Adelaide and Perth are set to witness steady growth, with Adelaide’s median house price expected to top $800,000 for the first time, and Perth’s median price likely to surpass $700,0001. Meanwhile, Brisbane’s house prices are forecast to rise between 1 and 4%, with unit prices potentially achieving a new record by July 2024.

However, while the overall forecast is optimistic, both Dr. Powell and Ms. Creagh highlight certain factors that could temper the pace of price increases, including the eventual containment of growth due to affordability issues, possible further interest rate hikes, and the possibility of an increase in housing supply if seller confidence improves.

Overall, while the market recovery won’t be entirely smooth, it is expected to be resilient, with Australia’s property market poised for a strong comeback, breaking records and showing optimistic signs of growth.

References:

Williams, S. (2023). Property market in recovery phase, house prices tipped to continue rising: Domain Forecast Report. https://www.domain.com.au/news/property-market-in-recovery-phase-house-prices-tipped-to-continue-rising-domain-forecast-report-1219736/ 

Calautti, L. (2023). When property prices could peak again if pace of growth continues. https://www.realestate.com.au/news/when-property-prices-could-peak-again-if-pace-of-growth-continues/