Property prices expected to jump 2–5% in 2023: PropTrack

The biannual PropTrack Property Market Outlook August 2023 Report has forecast national property prices to increase by a further 2–5 per cent by the end of 2023 following a 2.3 per cent increase in prices over the first six months of the 2023 calendar year.

PropTrack’s Home Price Index recorded a 0.16 per cent increase in national home prices in July to sit 1.36 per cent above July 2022 levels.

Across the combined capitals, prices are projected to increase a further 3–6 per cent, with all capitals expected to see positive price growth for the rest of the year excluding Hobart that is set to see a decrease of 3–6 per cent and Darwin with a drop of 3 per cent to 0 per cent change.

According to the report, Perth is expected to have the strongest growth at 4–7 per cent, followed by Sydney and Adelaide, both at 3–6 per cent, and Brisbane at 1–4 per cent growth.

While Melbourne and Canberra are also forecast to record price growth, it’s less pronounced than the other capitals, with Melbourne ranging from a drop of 1–2 per cent growth and Canberra seeing 0–3 per cent growth.

PropTrack director of economic research and report author Cameron Kusher stated limited supply of available properties for sale was a “key factor contributing to buyer competition and price growth”.

“National property prices increased 2.3 per cent over the first six months of 2023, signalling a shift in the housing market and reversing the declines experienced in the prior six months,” Mr Kusher said.

“We saw price increases despite rising interest rates and reduced borrowing capacities and anticipate moderate price increases to continue over the coming months.”

Mr Kusher added that the outlook for 2024 is “much less clear” as a large cohort of fixed-rate borrowers’ mortgages is set to roll off to variable rates, from 2 per cent to around 6 per cent.

“Interest rate changes act with a lag, and as such, the possible impact of higher repayments on these borrowers won’t be seen until 2024. At this stage, we are forecasting modest price growth in 2024,” Mr Kusher said.

Major bank revises price forecast

National Australia Bank (NAB) recently adjusted its house price forecasts and has suggested that home values will end 2023 up 4.7 per cent, instead of down 4 per cent.

Additionally, NAB’s outlook projects prices to increase by 5 per cent in 2024 with supply and demand imbalance offsetting the drag from reduced borrowing power and affordability.

While NAB said the resilience in house prices has been “somewhat surprising given the sheer impact of rising interest rates on borrowing power and affordability”, it flagged that prices are up 16 per cent from pre-COVID-19 levels and have tracked above 1 per cent month on month over the past two months.

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