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Sydney property prices will rise to a new median record of just over $1.6m, according to Domain.
Sydney property prices will rise to a new median record of just over $1.6m, according to Domain. Photograph: Brook Mitchell/Getty Images
Sydney property prices will rise to a new median record of just over $1.6m, according to Domain. Photograph: Brook Mitchell/Getty Images

House prices will keep rising into next year, says Domain, as immigration boosts demand

Sydney to lead recovery with 6% to 9% increase by next June while Melbourne, Adelaide, Perth and Brisbane will come close to or beat record highs

The recovery of real estate prices will extend across Australia and well into 2024 as a swelling population overwhelms the headwinds of higher interest rates and reduced borrowing limits for some prospective buyers, according to data group Domain.

Sydney, which led the fall in home prices last year as the Reserve Bank began lifting its cash rate, will also power the rebound. By the end of June next year, the city’s houses are forecast to be 6% to 9% higher than at the end of last month, lifting the median price to a record of just over $1.6m.

Melbourne’s rebound will be more modest over the 13 months, with the projected rise of as much as 2% clawing back only about a third of the retreat during the recent downturn. The median value will edge towards $1.05m, or shy of the record $1.094m achieved in December 2021, Domain said in its forecast report.

Adelaide and Perth’s houses prices should also recover to set fresh highs and Brisbane would come close, underscoring the broad-based scope of the rebound, said Nicola Powell, Domain’s chief of research and economics.

“It’s going to be a surprise, the fact that we’re going to have many of our capital cities fully recovered from the downturn by the end of next financial year,” Powell said. “[What’s] really underpinned the recovery in price, particularly so in Sydney, has been the lack of listings.”


Spring listings were 11% lower than the five-year average across the major cities. “This signals rising competition between buyers helping to stabilise or improve prices in certain markets,” the report said.

Many economists earlier this year predicted double-digit falls in property prices as Reserve Bank interest rate rises deterred buyers, particularly investors.

However, a net-migration surge that added 400,000 people this fiscal year and will add another 300,000-plus next year, helped to stem and then reversed the slide in values.

The RBA is concerned the recovery in prices, if sustained, “would imply less of a drag on consumption in the year ahead than had previously been envisaged”, the minutes for its June board meeting showed. Supply of new housing was also being hindered by high material costs and shortages of skilled workers.

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Domain estimated net overseas migration would drive demand for nearly 130,000 extra dwellings across Australia in the coming financial year, with NSW, Victoria and Queensland receiving the largest share of new residents.

While many newcomers typically opt to rent on arrival, the tight rental market would drive many into home ownership sooner.

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Powell said the construction sector would find it hard to respond because many firms were struggling even with an uptick in prices in the offing.

Since the beginning of the pandemic, the cost of building a new house had risen about 32% but businesses had only been able to extract a 22% rise in “output costs” for what they sold. Building approval numbers were also falling, pointing to fewer new builds next year.

“All of those things will eventually feed into higher property prices,” Powell said.

Headwinds that might restrain property price rises include the RBA lifting interest rates more than one more time before its hiking cycle ends. Some of the buying demand also won’t return if the central bank ends up delaying expected rate cuts until the second half of next year.

Similarly, the 400 basis-point increase in the RBA’s interest rate since May 2022 had seen the maximum borrowing capacity shrink significantly. “For some, the change could dash their hopes of a property purchase as they simply cannot borrow enough to purchase a home,” the report said.

Another drag on housing demand and prices could be weak wage growth, making it harder for first home buyers to accumulate a sufficient deposit, Domain said.

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