Two new surveys show ongoing property price surge
RBA rate cuts could fuel price rises of 6 per cent to 10 per cent by early next year, experts are predicting.
INTEREST rate cuts are driving a housing boom that will see price rises of up to 10 per cent by the end of the year, property experts predict.
Home prices have already moved upwards, with data from Cotality’s Home Value Index recording another 0.5 per cent in May, taking the national index 1.7 per cent higher over the first five months of the year.
The PropTrack Home Price Index showed national home prices rose by a slightly lower 0.39 per cent in May. It marks the fifth consecutive month of growth and a new record high for Australian home values.
Commenting on the rises, Cotality’s head of research Eliza Owen said: “Another two rate cuts are expected over the course of the year by most of the major banks, and the influence on the market is likely to be higher values and higher sales activity.
“I think 6 per cent to 10 per cent rises in house prices by early next year is a possibility, but I would put it probably at the lower end of that range.
“You will get a boost to borrowing capacity from lower interest rates, but that still puts an affordable purchase price for many households much lower than where property prices actually are especially when you consider the median house value in the combined capitals is now over $1,000,000.
“And I think other factors like rising unemployment, softer wages growth could put a bit of a lid on that growth rate as well.”
Proptrack’s Eleanor Creagh also noted the influence of the rate cuts.
“Since the Reserve Bank’s February rate cut, price momentum has reaccelerated and broadened, with all capitals seeing prices lift,” she said.
“Annual price gains now sit just above 4 per cent, with capital city markets leading the charge and broad-based increases signalling growth becoming more synchronised across the country, and the divergence seen in 2024 narrowing.
“Lower interest rates have lifted borrowing capacity and boosted buyer demand. And with further rate cuts expected, prospective buyers are moving off the sidelines, accelerating purchase decisions.
Looking ahead, while stretched affordability will remain a constraint, a chronic lack of new housing supply, population growth, and targeted buyer incentives are expected to keep upward pressure on prices.
In combination with interest rates continuing to move lower, these factors are likely to drive further price growth through the remainder of 2025.
