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Property prices are about to skyrocket: Here’s why

The property market is on its way back up, and it may have further to rise.

A composite image of a sign out the front of a property that indicated it is for sale and rows of apartment blocks and houses on the Australian coast line.
An increase in migration is expected to boost Aussie property prices. (Source: Getty)

Aussie property prices are expected to hit new highs next year, with some capital cities expected to see prices rise above the COVID boom.

The Domain Forecast Report anticipated a well-established and steady recovery for the Australian housing market.

House prices in Sydney, Adelaide and Perth, and unit prices in Brisbane, Adelaide and Hobart, could have fully recovered from the 2022 downturn by the end of the next financial year.

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House prices in Sydney, Adelaide and Perth will be at a new record high and unit prices in Brisbane, Adelaide and Hobart could also reach a new record high.

Adelaide and Perth house prices are predicted to rise slowly and may avoid a downturn completely – instead seeing a period of modest or sideways growth.

“Following a financial year of elections, interest rate rises and initial signs of a recovery, we know that people are closely watching what’s to come for the housing market,” Domain chief of research and economics Nicola Powell said.

More people equals higher prices

Powell said the main driver behind higher property prices would be the uptick in migration.

“Population pressures will lead the charge in factors driving housing demand and property prices higher over the next 12 months. Australia has seen an exponential increase in temporary and permanent migration since the international border reopened in late 2021 to alleviate skills shortages,” Powell said.

“Of course, unlike natural population growth, those arriving from overseas aren’t already housed. This puts us in a position where, in the next financial year alone, nearly 130,000 extra dwellings will be needed, with the eastern seaboard receiving the largest share of migrants.

“When you combine this with unprecedented headwinds in the construction industry and unseasonably weak listings, this has contributed to a forecast of continued tight housing supply that drives up market competition. While prices are expected to rise, affordability will contain the pace of growth, as the likes of rapidly rising interest rates and ongoing mortgage serviceability challenges continue to play out in a complex and dynamic market.”

How much will prices rise?

Location

House price changes

Unit price changes

Sydney

6-9%

2-5%

Melbourne

0-2%

-2-1%

Brisbane

1.4%

0-1%

Perth

1-3%

1-3%

Adelaide

2-5%

0-2%

Hobart

3-5%

1-3%

Canberra

2-4%

-1-2%

Combined capitals

2-4%

1-3%

Combined regionals

1-3%

0-2%

Regional NSW

-1-1%

1-3%

Regional VIC

1-4%

1-3%

Regional QLD

3-4%

0-1%

Gold Coast

2-4%

1-2%

Sunshine Coast

1-2%

1-3%

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