Price modelling: how much you’ll earn from your home next year

Homeowners in key suburbs could pocket more than $200k in equity over the next year alone, new price modelling has revealed.

Multiple homeowners across the country could see another $200,000 or more added to their net worth next year if recent trends in the housing market are repeated.

PropTrack analysis recently modelled what home values would be if growth from the last five years was replicated, showing properties could be worth double what they are now in some areas.

PropTrack noted that the modelling was not an exact forecast since past performance was not a definitive indicator of future price rises, but experts added that many of the forces that drove up prices over the last half decade remain in place.

Using the recent trajectory of prices as a guide, the most extreme rises over coming years would occur in more affordable capital city markets due to higher interest rates pushing more buyers to these regions.

Suburbs with limited building activity and enduring “lifestyle” appeal for a large cohort of buyers would also see stronger growth due to the imbalance of supply to demand.

Many of the drivers of home prices over the past five years remain prevalent in the market. Picture: Thomas Lisson

There were an additional 151 suburbs spread around the country where the average annual increase in value over the five-year period would be over $200,000 a year – most were areas where values were already high.

Where your home will earn more than you

Some of the biggest rises in value terms were expected in Sydney, according to the PropTrack data.

This was largely because values in the NSW capital were already by far the highest in the country, making even smaller percentage price gains equate to larger gains in dollar terms.

The biggest home price rises outside of Sydney were in Queensland’s Sunshine Coast and Gold Coast.

Other high growth markets were Perth’s affluent suburbs, such as Dalkeith – where residents include Australia’s richest person Gina Rinehart.

PropTrack said the modelling was not a traditional forecast but rather a “thought exercise” to illustrate some of the probabilities for the market.

It’s worth noting that growth in real estate values has historically been much more consistent than with other assets classes like shares. At the same time, past performance is no guarantee of future rises.

It comes as ABS data released this week showed the total value of the Australian housing market hit $10.7 trillion this year.

Why home prices are set to keep rising

Commenting on continued growth in property prices this year, PropTrack economist Eleanor Creagh said building capacity constraints at a time of still buoyant buyer demand were likely to continue putting upward pressure on prices.

Rich get richer? Pricey suburbs along the Sydney Harbour were expected to get even more expensive.

“This mismatch between supply and demand is continuing to offset the higher interest rate environment,” she said.

“Further, current interest rate stability has sustained buyer and seller confidence, while ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of further growth.”

Top housing market performers

The Australian suburb that would see the highest rise in home values in dollar terms was Putney in Sydney’s lower north shore, according to the PropTrack data.

House values in the suburb would rise by about $3.4m over the next five years if previous growth trends were repeated. This would push the median price from $3.57m currently to $6.98m.

The increase would equate to an average annual rise of about $681,000.

The Perth property market has been heating up in recent years.Picture: Tourism Western Australia

Luxury Sydney beach suburb Bronte would see a similar spike in house values of about $3.27m over five years, or an average of about $654,000 annually.

The median in the popular waterfront suburb would be $7m although many of the houses in the area are already selling for well over $10m.

There were an additional 11 Sydney suburbs where the average value increase each of the years would be over $400,000.

Perth’s top growth suburbs, with expected average annual value rises of over $300,000 a year, were Dalkeith, Cottesloe, City Beach and Marmion.

Queensland suburbs where homeowners would get similar equity gains were Sunshine Beach, Moffat Beach, Sunrise Beach and Doonan – all on the Sunshine Coast – and Gold Coast suburb Broadbeach Waters.

Victoria’s top growth suburbs, with expected annual value rises of just over $200,000, were Barwon Heads, Lorne and Anglesea, in Geelong, and Deepdene in inner Melbourne.

PropTrack economist Paul Ryan said home values grew the fastest over the last five years in areas with larger houses and blocks and there was little suggest this would change.

“If you look across the suburbs that have done the best (over the past five years), they really hit those changes in preferences we’ve seen since the pandemic — one, towards lifestyle areas, and two, bigger blocks and houses,” he said.

“People are really valuing space in homes, and that hasn’t changed.”

Areas where homeowners had already received substantially equity gains often fuelled further big spending in the surrounding area, Mr Ryan said.

“This dataset shows just how much equity people have gained over the past five years and how it has enabled an enormous amount of upgrade activity.

Many of the biggest property spenders across capitals, especially Sydney, did not require a mortgage. Picture: NCA NewsWire/ Gaye Gerard

“We’re seeing more people buying with larger deposits, which tells you people who are able to upgrade have seen those equity uplifts.”

Ray White chief economist Nerida Conisbee said the biggest pressure on housing prices would be low supply and soaring construction costs.

Originally published as Price modelling: how much you’ll earn from your home next year