Sydney, Brisbane and Perth house prices to soar by 12% this year! Housing confidence at highest level in two years

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Sydney, Brisbane and Perth house prices to soar by 12% this year! Housing confidence at highest level in two years

According to the latest forecast by the National Australia Bank (NAB), house prices in Sydney, Brisbane and Perth are expected to rise by about 12% this year, driven by persistent supply shortages and increased demand.

The more optimistic forecast comes as real estate professionals have boosted their expectations for the recovery of the property market in the next few years, with confidence levels reaching the highest level in about two years.

NAB has significantly revised up its house price forecast from the previous quarter, now expecting capital city house prices to rise by 8% this year and by another 5% in 2024.

In July this year, NAB predicted that national house prices would rise by 4.7% this year and by 5% in 2024.

NAB said that severe supply-demand imbalances continued to support property prices amid rising interest rates and lower borrowing capacity, while strong population growth and a healthy labour market were expected to continue in the short term.

Alan Oster, NAB Group Chief Economist, wrote in his analysis: “We have raised our expectations for near-term residential prices, expecting the CoreLogic 8 capital city residential price index to rise by around 8% by the end of this year, as recent months’ results have been slightly stronger than expected and are expected to continue in the near term.”

Brisbane performed particularly well this year, with house prices expected to rise by 12.1%. Perth was expected to rise by 11.9%, while Sydney was expected to rise by 11.6%.

Adelaide’s house prices were expected to rise by 8.6%, Melbourne by 4.7%, but Hobart’s house prices were expected to fall by 3.3%.

In July this year, NAB predicted that Sydney house prices would rise by 7%, Melbourne by 2%, Brisbane by 5.4%. The bank also predicted that Adelaide house prices would rise by 3%, Perth by 6%, Hobart by -6.4%.

In the third quarter, house prices in major cities continued to rise at a relatively stable pace. Since the beginning of this year, capital city house prices have risen by about 8%, almost completely reversing the downward trend of the previous nine months.

NAB’s survey found that confidence levels among real estate professionals continued to rise in the third quarter, and expectations for the recovery of the property market in the next few years also improved.

NAB’s one-year confidence index rose by 50 points in the third quarter, while the two-year confidence index rose to 54 points. Both indicators reached their highest levels in about two years, well above their long-term averages.

Expectations for house price growth over the next 12 months also improved across Australia, except for a 1% decline in the Australian Capital Territory (ACT).

Real estate professionals reported that housing rental market supply was very tight, with a net 79% of respondents saying that rental market supply was insufficient in their area.

Rising interest rates remained the biggest constraint for existing home buyers across Australia, followed by inventory shortages, especially in Western Australia.

Access to credit and price levels were major barriers for buyers in all states except Western Australia, while job security and other investment returns had the least impact on buyers.

NAB’s latest survey results also found that foreign buyers were increasing, accounting for 10.1% of total sales in the new home market, a five-and-a-half-year high.