KPMG Predicts 5% Increase in House Prices by End of Year
KPMG anticipates a 5.3 percent increase across capital cities and a 4.5 percent increase nationwide by December.
While KPMG projects a 5.3 percent increase across capital cities and a 4.5 percent increase nationwide by December, it acknowledges the varying growth rates between different markets.
Perth is expected to experience the most rapid increase in property values, up to 10 percent, while Darwin is likely to see a more modest growth of under 1.7 percent.
Following Perth, Brisbane and Adelaide are predicted to have significant increases in house prices of up to 7.9 percent by the end of the year.
Sydney and Melbourne, the two largest cities, are forecasted to see growth rates of 4.9 percent and 2.8 percent, respectively.
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KPMG’s analysis also indicates that Sydney, Melbourne, Canberra, and Darwin are likely to experience stronger growth in 2025 compared to the current year, while growth rates in other capital cities are expected to slow.
This projection is based on the expectation that the Reserve Bank of Australia (RBA) will start reducing interest rates next year.
Chief economist Brendan Rynne of KPMG stated, “After the remarkable surge in house prices in several capital cities over the past year, we anticipate a deceleration in the growth rate due to decreased migration, delayed effects of high interest rates, and an anticipated rise in unemployment for the remainder of this year.”
He added, “Foreign investment activity has yet to recover to levels seen two years ago. Nonetheless, we still anticipate significant price gains over the next 18 months, particularly in 2025, as the RBA begins implementing interest rate cuts as forecasted.”
Factors contributing to this trend include an ongoing shortage of housing supply, high construction labor costs, and elevated rental prices.
On a separate note, Domain’s Forecast Report predicts growth of up to 6 percent for houses and 4 percent for units by the end of the 2024-25 financial year.
“Most capital cities are expected to achieve record-high house and unit prices by the end of FY25, with the exception of Melbourne and Canberra,” the report highlighted.
Sydney’s median house price is projected to exceed $1.7 million, while Brisbane is anticipated to nearly reach $1 million in the same period.
RBA May Increase Rates
In contrast to the prevailing expectation of declining interest rates, chief economist Phil O’Donoghue of Deutsche Bank anticipates the opposite scenario.
He foresees the RBA resuming rate hikes in August.
Data from Deutsche Bank reveals that Australia’s core inflation has increased by 0.4 percent since December, contrasting with a decline of 0.2 percent in New Zealand and 1.7 percent in the UK.
While the RBA has maintained the cash rate at 4.35 percent since November 2023, further rate hikes have not been ruled out.
