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The Australian real estate market is expected to witness a robust growth in 2023, as national property prices are projected to rise up to five per cent.
This development follows the more than two per cent lift recorded from the beginning of the year.
Key points (TL;DR):
National property prices in Australia are tipped to rise by five per cent in 2023
Perth leads the anticipated property price surge, with an expected growth between 4-7%.
Adelaide and Sydney follow closely, projecting a 3-6% increase while Brisbane shows modest increase between 1-4%.
Sluggish growth is expected for Victoria's Melbourne, with a maximum 2% increase.
Despite predicted rises in interest rates, author of the report, Cameron Kusher notes that restricted availability of properties remains a significant factor for price increases.
An uncertain forecast for 2024 is due to high volume of fixed-rate mortgage holders poised to exit current interest rates and reset around 6%.
Despite uncertainties, property price growth in 2024 looks positive, hinting at long-term market stability.
Perth is predicted to lead the pack with a growth ranging from four to seven per cent, according to an REA Group report.
Property prices in Adelaide and Sydney are slated to increase by between 3% and 6%, while Brisbane property prices will grow between 1% and 4%.
Melbourne will see somewhat sluggish growth with a maximum increase tipped at 2% and the likelihood of a slight dip towards the end of the year.
What's driving prices?
The forecasts hinge on an expectation that the series of interest rate elevations of the Reserve Bank of Australia (RBA) approaches its zenith.
REA Director of Economic Research and report author Cameron Kusher says the limited number of properties for sale is breeding competition among buyers, leading to property price surges.
Despite rising interest rates and diminished borrowing capacities, price growth was persistent.
"We anticipate moderate price increases to continue over the coming months," predicts Kusher.
Will prices come down in 2024?
The forecast for 2024 is still hazy due to the high volume of fixed-rate mortgage holders preparing to exit from current interest rates of roughly 2%, and a reset poised around 6%.
"Interest rate changes act with a lag and therefore, the potential aftermath of elevated repayments on these borrowers won’t materialise until 2024," says Kusher.
The Bottom Line
2023 property prices will rise, with Melbourne the only state where prices may dip before the end of the year.
2024 property price growth will remain moderate.
The property market will competitive for the foreseeable future.
Go deeper: Is buying a block of land a good investment?
Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
