Australia’s house prices predicted to rise significantly in 2024
Economists have made a bold prediction about when Australia’s house prices will start rising again.
Economists are predicting Australia’s house prices will rise again in 2024 after a slump coming out of the pandemic, warning buyers in big cities to prepare for another spike.
While Westpac experts predicted property values to plunge through 2023, ANZ senior economist Adelaide Timbrell said steady wage increases would generate at least a five per cent rise in property prices in 2024 and beyond.
“Once we hit 2024, we’ll have seen enough wage increases and a little bit of an easing in mortgage rates which together will create a five per cent increase in housing prices through that year,” she said, according to Daily Mail Australia.
Timbrell also referenced the incoming expiry on 2 per cent fixed-rate mortgages between June 2023 and June 2024 as a major driver in the expected price change.
“That’s when we’re really going to start to see household, cash flow impacts of these rate rises,” she said.
“That’s also where we’re going to see a lot more of the risk when it comes to arrears and people falling a little bit behind.
“We do see Sydney and Melbourne being among the worst performers.
“People, too, tend to maximise their borrowing capacity more often in Sydney and Melbourne because housing prices are more expensive.”
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The economist said reduced borrowing capacity, as interest rates kept rising, was likely to cause prices to fall in 2022 and 2023.
“Now the decline in housing prices that we’re seeing at the moment and will continue to see for the next 18 months is really more about borrowing capacity than it is about distress,” she said.
“It’s not that we expect to see a lot of houses come up for sale, because of people not being able to afford their mortgages.”
Timbrell’s prediction came after Westpac economists told Aussies to expect a further decrease in prices through 2023, with the nation’s two largest cities expected to plunge by an eye-watering 18 per cent over the next 12 months.
Westpac’s economists say Sydney and Melbourne will soon see the decrease, with property values in the NSW capital predicted to fall 10 per cent this year and then by another 8 per cent in 2023.
The report also found Melbourne was the inverse of that, expected to drop 8 per cent this year and 10 per cent next year.
Hobart property owners are also slated to miss out as dwellings in the Tasmanian capital are tipped to tank by 14 per cent in the next 18 months.
In all, the author of Westpac’s August Housing Pulse report, senior economist Matthew Hassan, warned that the situation looked “bleak”.
“The housing downturn that began at the start of the year has accelerated and broadened over the last three months,” he said.
Nationally, property prices are still expected to fall 16 per cent over the next 18 months.
There’s been a “rapid reversal” in fortune in NSW, according to the report, with housing turnover down 30 per cent since January while Sydney dwelling prices are already down over 7 per cent.
The areas in NSW that saw the biggest gains last year – during a time that saw national house prices increase by 25 per cent – are now due for a correction.
“Sub-regionally, prices are reversing more quickly in the eastern suburbs, northern beaches and north Sydney – which outperformed during the boom – but holding up better in the outer western suburbs which lagged on the upturn,” the report noted.
“Regional slowdowns have been more abrupt for Illawarra and Byron Bay.”
Victoria isn’t faring much better with turnover down by a third since the start of last year, although the research did point out it had a “high starting point” when turnover hit a 14-year high in 2021.
Melbourne dwelling prices are about 4.5 per cent off their peak already and are tracking lower at 1 to 1.5 per cent a month.
Melbourne’s northeast and inner south were named and shamed as the two areas “leading declines”.
According to forecasts, Hobart’s property market isn’t safe either, slated to drop 6 per cent for the remainder of this year followed by an 8 per cent per cent decline next year.
It was slightly better for Brisbane, Perth and Adelaide, which will continue to grow into 2022. Although dwellings in those three cities will drop in value next year, it will only be in the single digits.
ANZ’s 2024 Housing Price Predictions
Sydney — 6 per cent rise would see values rise by $68,728 to $1,214,198
Melbourne —6 per cent gain would see prices rise by $50,242 to $887,617
Brisbane — 5 per cent gain would see prices rise approximately $39,122 to $821,561
Adelaide — 2 per cent gain in 2024 would see prices rise by $11,680 to $595,675
Perth — 3 per cent gain would see prices rise by $15,432 to $529,826
Darwin — 3 per cent gain would see prices rise by $15,210 to $522,221
Hobart — 4 per cent gain would see prices rise by $26,580 to $691,085
Canberra — 4 per cent gain would see prices up by $36,229 to $941,956
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