PropTrack’s Property Market Outlook Report predicts home prices will increase by up to 5% nationwide this year, with most capital cities posting gains.
- National property market is forecast to increase by up to 5% by the end of 2023.
- Perth, Adelaide, and Sydney are expected to lead the pack in price growth, while Darwin and Hobart are expected to post negative gains.
- Sydney's housing affordability crisis has many millennials packing and moving to regional NSW.
The new forecast comes after property prices rose 2.3% over the first six months of the 2023 calendar year.
The PropTrack Home Price Index revealed national home prices jumped 0.16% in July, the seventh consecutive month of increases.
PropTrack Director of Economic Research Cameron Kusher said the housing market has been influenced by the volume of stock available for sale.
“Limited supply of available properties for sale was a key contributing factor to buyer competition and price growth,” Mr Kusher said.
“We saw price increases despite rising interest rates and reduced borrowing capacities and anticipate moderate price increases to continue over the coming months.
“We expect property prices to increase by up to 5% nationally over the remainder of 2023, with greater growth projected in the larger capitals.”
All capital cities except Hobart (-3% to -6%) and Darwin (-3% to 0%) are expected to see positive growth over the last half of this year.
Perth is expected to reap the biggest price gains this year, up between 4-7%, followed by Sydney and Adelaide with 3-6% respectively.
| Region | Current forecast for Dec 2023 | Current forecast for Dec 2024 |
| Sydney | 3% to 6% | -1% to 2% |
| Melbourne | -1% to 2% | 0% to 3% |
| Brisbane | 1% to 4% | -2% to 1% |
| Adelaide | 3% to 6% | 0% to 3% |
| Perth | 4% to 7% | 0% to 3% |
| Hobart | -3% to -6% | -1% to -4% |
| Darwin | -3% to 0% | -1% to 2% |
| Canberra | 0% to 3% | -2% to 1% |
| Combined capitals | 3% to 6% | 0% to 3% |
| National | 2% to 5% | 0% to 3% |
Source: PropTrack Home Price Outlook
Meanwhile, the longer-term picture of the property market beyond 2023 is clouded.
“The outlook for 2024 is much less clear with a large cohort of fixed-rate borrowers' mortgages set to expire from current interest rates of around 2% and reset to around 6%,” Mr Kusher said.
“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.
“At this stage, we are forecasting modest price growth in 2024.”
AMP Chief Economist Shane Oliver has a “base case” that home prices have bottomed out for this cycle, but notes that the risk of another low is present.
“Our base case is property prices will rise around 5% next year as interest rates start to fall,” Mr Oliver said.
“However, our confidence in this forecast remains low as the risk of another leg down in prices is very high as interest rate hikes continue to impact and the economy slows pushing up unemployment.”
Sydney’s housing affordability driving families out
New research from e61 Institute found Sydney millennials are packing up in droves in the pursuit of housing affordability.
According to the research, Sydney has been losing approximately 0.5% of its population per annum over the last 20 years to regional NSW hubs and other capital cities.
e61 Institute Pre-Doctorate Analyst Elyse Dwyer said rising house prices are the main culprit in the decrease of families leaving Sydney.
“For every extra percentage point that an area’s housing prices grew in the five years to 2016, 0.2% of the population left in the following five years,” Ms Dwyer said.
“Significantly, it was people in their 30s leaving at the fastest rate – the age when young families often need bigger homes.
“The movements are an unintended consequence of housing shortages and is a key issue that needs to be addressed.”
For those Sydneysiders deciding to pack up and leave, most were choosing coastal hubs within commuting distance from the city such as Wollongong and Newcastle.
"Full steam ahead: property prices to lift by up to 5% this year" was originally published on Savings.com.au and was republished with permission.