Major financial institutions, like NAB, have updated their property price predictions for Australia’s capital cities. Initially, a 4.7% increase was expected. Now, it’s forecasted to rise by a significant 8% this year.

While the immediate future looks promising for homeowners, the future predictions suggest a more stable market. By 2024, the price growth is expected to settle around 5%. This means, over the next two years, property prices might increase by 13%.

Rental Market Struggles

A shortage of available housing, influenced by robust migration numbers and challenges in the construction sector, is causing rents to soar. Some areas, like a certain suburb in Sydney, might even experience a rise of $300 per week in rent by the year’s end.

What’s Driving the Demand?

NAB’s chief economist, Alan Oster, points out that the strong demand is mainly due to high migration numbers and issues in the building industry. Interestingly, even the potential dampening effect of the interest rate hikes from the previous years might not slow down this demand significantly.

Interest Rates: What’s the Future?

The Reserve Bank is expected to continue adjusting interest rates. After a cooling-off period, with rates standing at 4.1% since June, there’s anticipation of another rise. If this happens in November, it’ll be the 13th rate hike since May 2022.

Higher interest rates often mean higher mortgage repayments. Borrowers might have already felt this pinch, with a staggering 63% increase in monthly mortgage repayments in just over a year.

City-by-City Property Analysis

• Perth: Property prices might leap by 12% this year but could slow down to a mere 1% in 2024.
• Brisbane: Homes are increasing in value, potentially around or above 12% this year, slowing to 6.5% in 2024.
• Adelaide: A projected 8.6% growth for 2023, then a drop to 6.2% in 2024.
• Hobart: After an impressive growth spurt during the pandemic, the growth rate now is about 6.6% from its peak in March 2022. However, a dip of 3.3% is predicted for this year, and a stable market is expected in 2024.
• Sydney: An expected growth of 11.6% in 2023, which will likely decrease to 5% in the subsequent year.
• Melbourne: The only capital city where price increases might speed up from 4.7% this year to 5.5% next year.

Rental Forecast

Renters, brace yourselves. Due to a housing shortage, rent prices are anticipated to skyrocket in many areas:

• Sydney: In suburbs like Dee Why, rents might surge by more than $300 a week. Other sought-after areas could see increases of over $200 weekly.
• Queensland: Places like Surfers Paradise, Broadbeach, and Isle of Capri may have rent hikes of around $170 per week by 2024.
• Victoria: Suburbs in Melbourne, such as Port Melbourne, South Melbourne, and Southbank, could face the sharpest rent rises in the state – potentially up by $165.

However, in many other Australian suburbs, the increase might be more moderate, likely under $50 per week.