It was only a few weeks ago that our new $1.3M median broke records (and many first home hopeful’s spirits) and yet here we are again with another headline pertaining to the relentless rise of Australian house prices. According to the latest forecast by Oxford Economics Australia (OEA), Sydney’s median is predicted to hit $1.93M and units $1.09M by June 2027, an increase of around 40%. Nationally, house prices will climb to $1.34 million – currently, OEA has the median at $939,000.
How and why? It’s predicted that undersupply and increased overseas migration will continue to drive prices, with anticipated interest rate cuts already instilling buyer confidence as evidenced in March data, showing dwelling values up 9.6% from the same time last year.
The OEA forecast goes on to predict that in the next three years, Perth’s median house price will surpass the $1M mark (currently $704,000), while Melbourne ($779,000), Brisbane ($818,000) and Canberra ($839,000) will hit $1.2M by 2027. Adelaide (currently $734,000) is predicted to rise to just under $1 million, with Hobart’s median climbing to $855,700, and Darwin to $695,600.
Spurred by the turbulent trio that is supply shortage, strong economy, and surging population, Perth’s predicted upturn will be the most impressive, with house prices surging 50% by June 2027.
Over the same period, unit growth seem set to perform well, with weak apartment completion volumes creating a competitive market. Nationwide, unit values are set climb by 31%. In Sydney, unit medians are predicted to increase 35% to $1.09M. In Melbourne and Adelaide 27%, Brisbane 18%. In both Perth and Hobart, predicted growth will be over 30%.
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What’s interesting is this latest, much publicised forecast is only $100,000 higher than realestate.com.au’s 2021 predictions on where median house prices would be by 2027. Basing their estimates on property values continuing to grow at the same rate they had since 2011, they surmised that Sydney’s median house price would be $1.92M in 2027 – though they had the median unit price pegged much lower at $1.02M.
Over ten years, Sydney’s house prices have increased over 97% (nope, not a typo). While recent interest rate hikes are largely to blame for the current affordability crisis, the slow and steady march toward a critical undersupply of dwellings is what has and will continue to push prices upwards.
Still, the highly anticipated and wildly speculated upcoming interest rate cut looks set to ease affordability across all markets, lowering the portion of income required to pay a mortgage to 48.2%, a decrease of 7.1%. But don’t expect much relief at the petrol pump.
