House prices are set to run hot for the rest of year, according to a major bank – but while those owning property might be smiling, renters already struggling with the cost of living will battle to keep a roof over their head.
NAB has increased its near-term forecast for the capital cities to an eight per cent rise in house prices, up from the previous forecast of 4.7 per cent.
While the bank predicts price gains will ease in 2024 back to five per cent, this still represents a whopping 13 per cent growth in what property buyers need to fork over in just two years.
Meanwhile, a shortage of accommodation driven by strong migration and building industry woes is set to keep rents relentlessly increasing with one suburb forecast to see a staggering $300-per-week increase for rentals by the end of the year.
NAB chief economist Alan Oster said strong demand, driven by high migration and building industry woes, would keep house-sellers happy and largely cancel out the dampening effect of interest rate rises from earlier this year and in 2022.
Auctioneer Karen Harvey sells a property in Sydney, which is experiencing a strong growth in prices
‘For 2024 we expect prices to rise by around five per cent with population growth, rents growth and the labour market still supporting, offset by some pressure from the ongoing flow-through of higher interest rates,’ Mr Oster said.
Mr Oster also predicted another imminent rate rise was on the cards following the Reserve Bank having a cooling off period leaving them at 4.1 per cent since June.
‘On rates, we continue to see the RBA lifting the cash rate to 4.35 per cent at the November meeting before remaining on hold until the second half of 2024,’ Mr Oster said.
‘From there, we think the RBA can begin to ease policy back towards neutral of around three per cent with growth below trend and the unemployment rate rising to around five per cent by end 2024.’
If rates do go up in November, it would mark the thirteenth rise since May 2022, adding to the stress of borrowers who have already copped a 63 per cent increase in monthly mortgage repayments in little more than a year.
Despite the high mortgage repayments, the NAB forecast some capitals will see house prices gallop for the rest of the year, such as Perth which will run at a 12 per cent increase before a steep slowdown to one per cent in 2024.
Brisbane is also seeing rises of about or above 12 per cent this year, but that should ease to 6.5 per cent in 2024.
For those looking to get into a capital city property market there is little reprieve in prices forecast for at least the rest of this year (stock image)
Adelaide homes are expected to gain 8.6 per cent in value for the rest of 2023 and then slow to a 6.2 per cent gain next year.
PropTrack senior economist Eleanor Creagh told realestate.com that a lack of choice was driving up prices in the smaller capitals.
However, Ms Creagh said another smaller capital, Hobart, was not performing so strongly with prices increasing by 6.6 per cent from the March 2022 peak.
‘However, this comes after several years of outperformance as well as strong growth during the pandemic. Home prices in Hobart are still up 38.4 per cent since March 2020, ‘ Ms Creagh said
NAB predicts Hobart prices will actually dip 3.3 per cent this year and be flat in 2024 – meaning there’s at least some hope for first-home buyers looking to get their foot on the property ladder.
Sydney values are set to increase by 11.6 per cent in 2023 before slowing to five per cent in 2024.
Melbourne is only the capital predicted to see the price increases accelerate next year from 4.7 per cent to 5.5 per cent.
The housing shortage continues to spell bad news for renters with modelling released in August by Suburbtrends forecasting many tenants could face increases of over $100 per week by next year.
NAB chief economist Alan Osters said the lack of supply was set to strongly drive up house prices in the immediate future
In Dee Why, on Sydney’s northern beaches, rents are forecast to increase by a whopping more than $300 a week and $200-plus increases are also forecast for other popular areas in the city.
Queensland renters living in Surfers Paradise, Broadbeach and Isle of Capri can expect to paying an extra $170 a week by 2024.
Houses and units in the Victorian capital’s suburbs of Port Melbourne, South Melbourne and Southbank are facing the steepest increases in that state, with average rents forecast to go up by $165
In hundreds of other Aussie suburbs, rents are forecast to rise by less than $50 per week.