Property prices are expected to increase as much as a further 5 per cent nationally by the end of 2023, new data shows.
According to the PropTrack Property Market Outlook August 2023 Report, this comes after property prices climbed 2.3 per cent nationally in the first six months of the year.
Prices in Perth are forecast to rise the most, between four and seven per cent, followed by Sydney and Adelaide, which are each tipped to see property price increase of between three and six per cent.
PropTrack Director of Economic Research Cameron Kusher said Brisbane property prices were also expected to rise between one and four per cent.
“The property market has seen a turnaround this year with six consecutive months of property price growth,” he said.
“Limited supply of available properties for sale was a key factor contributing to buyer competition and price growth.
“National property prices increased 2.3 per cent over the first six months of 2023, signalling a shift in the housing market and reversing the declines experienced in the prior six months.
“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 five per cent nationally over the remainder of 2023, with greater growth projected in the larger capital cities.”
The report showed prices in Melbourne (minus one per cent to two per cent) and Canberra (zero per cent to three per cent) were also predicted to lift marginally.
This is based on a prediction that the cash rate, which was left on hold at 4.10 per cent this week, is nearing the peak of the hiking cycle.
Only two capital cities are forecast to see prices fall over the remainder of 2023 – Hobart and Darwin.
Property prices in Hobart are tipped to drop between three and six per cent, while in Darwin prices are forecast to dip by as much as three per cent.
The forecast is a stark turnaround from the February prediction, which tipped national property prices would drop between seven and 10 per cent, with prices in Sydney, Brisbane and Canberra expected to fall between eight and 11 per cent.
Mr Kusher said one of the main reasons for the about face was that low listing volumes had kept a floor under prices.
“When we did our initial forecast for this year, it was January and prices had been falling since March of last year,” Mr Kusher said.
“We were expecting that to continue because interest rates had risen a lot, they were still rising, borrowing capacities had reduced and on the back of that, we probably thought there would be more properties coming to the market, partly because of distressed sales, but that didn’t really come to fruition.”
The report shows that while new listing volumes rose to average levels in June, the volume of total listings on the market is lower than a year ago and historically low.
The number of total properties listed for sale throughout the combined capital cities was 9.6 per cent lower year-on-year in June 2023, and 17.8 per cent lower than the June average over the past five years.
Across regional markets, the number of total listings was 10.2 per cent higher over the year but still 39.5 per cent lower than the five-year June average.
“The number of new listings coming to the market remained quite low through most of the first half of this year,” Mr Kusher said.
“Sales volumes, as we got back from Christmas, really picked up quite strongly, relative to last year as well.
“It was almost a change of direction in that people came back from holidays and started to want to buy properties again, but nothing was coming to the market.
“So, that was really supporting prices and it has pushed prices higher over the first half of this year.
“And we expect that that’s going to continue.”
Mr Kusher said the outlook for 2024 was much less clear.
He said there had been a small lift in new listing and if that were to continue it would mean buyers had more choice and that could lower prices.
“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 two per cent and reset to around six per cent,” 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.”