In good news for some but not for others, property prices are about to boom, experts say. Auditing giant KPMG says house prices across Australia are likely to surge in 2024 and 2025. The jump could be as much as $200,000 in some areas.
Unsurprisingly, Sydney and Melbourne are the cities most likely to lead the charge. By mid-2025, data projections indicate Sydney buyers will pay an average $1.53 million for a house and $850,000 for a unit. That would represent a $200,000 average increase for houses and about $100,000 for units.
In Melbourne, the expectation is for a median house price of $1,024,495 by June 2025. A 4.9 per cent increase in the year to June 2024 will precede a whopping 12 per cent jump in June 2025.
Melbourne units won’t be far behind. KPMG expects a 3.1 per cent increase in unit prices by June next year, followed by another 7 per cent rise by June 2025.
Who or what is driving up house prices?
Interest from overseas, and particularly China, will play a big part in the house price surge, according to propertyupdate.com.au. Brett Warren, director of Metropole Properties Brisbane, says Chinese investment in Australia has already ramped up.
In the six months to June 2023, some 1432 purchase approvals totalling $1.8 billion were granted to Chinese buyers. That compares to a total of $2.2 billion for the entire 12 months to June 2022.
The continuing recovery from the COVID pandemic is playing a big part, in two ways. First, travel restrictions have been eased or removed, opening the door for immigration. Second, ongoing hard COVID lockdown rules has resulted in China’s wealthy searching for greener – or perhaps more accurately freer – pastures.
Such pastures include Singapore and Australia.
Other pressures
But foreign investment tells only part of the story. Other factors are also pushing up house prices, says KPMG chief economist Dr Brendan Rynne, with supply a major one. These factors are countering the effects of high interest rates, he says.
“Constrained supply will likely dominate the factors influencing property prices in the short term,” Dr Rynne says. “[This will] result in continued price gains in most markets during FY24 [the 2023-24 financial year].”
It won’t get any better for buyers in the year after that, Dr Rynne predicts. “House and unit prices will then accelerate further in the next financial year,” he says.
He cited continued limited dwelling supply as the cause. “Scarcity of available land, falling approval levels and slower or more costly construction activity” created that limitation, he says.
Elsewhere in Australia
These house price effects will be felt beyond Australia’s two largest cities, analysts predict. By mid-2025 Adelaide will “have an extra 21 suburbs in its million-dollar club” based on data projections.
In Brisbane, the projected rises could deliver a secondary blow to prospective homebuyers. The Queensland government provides a first home stamp duty concession for properties under $550,000. The predicted surge would take many currently eligible properties beyond this limit.
In short, house prices in Australia are likely to go nowhere but up over the next couple of years. Whether that’s good or bad news will depend very much on whether you’re buying, selling or sitting pretty watching prices surge.
Are you looking to buy and/or sell your property? Are the projected house price increases good or bad news for you? Let us know via the comments section below.
Also read: How will Centrelink assess my investment property?
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Why are we allowing overseas buyers to buy houses. Houses should be only able to be purchased by bona fide residents. An Australian could not buy a house in China.
MJP makes a lot of sense. JACKA.
Property that is freehold should be restricted to Australian Citizens only.
No foreigner should be allowed to own or purchase property that is freehold. This should include Non citizens that have permanent residence in Australia.
Allow them but units but the unit complex must be a minimum 55% owned by Australian citizens.
Non citizens that already own freehold property can be given 5 or 10 years to sell.
Secondly, stop negative gearing.
Just doing these 2 steps should slowdown the housing market and also have the positive affect of helping the rental market which is also out of control.
Let’s see if any politicians at local, state and federal level have the testicular fortitude to even suggest these points