BENGALURU (Reuters) – Australian home prices likely bottomed much earlier than previously expected and will rise for the rest of this year and next, as the Reserve Bank of Australia (RBA) is at or near the end of its tightening cycle, a Reuters poll of analysts found.The RBA has raised rates by 400 basis points since May 2022 to 4.10%, but that policy move did little to dent house prices which fell only about 9% from their peak, after surging 25% during the COVID pandemic. They rose for a fifth straight month in July.The same property analysts had expected a 16% peak-to-trough decline in a survey early this year. While much of the renewed price rises stem from a lack of available supply, the latest poll results suggest current interest rates aren’t restricting the market much.The Aug. 14-29 Reuters survey of 14 analysts forecast home prices will rise 4.4% this calendar year, a significant upgrade from the flat-lining predicted in a poll published in June.In 2024, average house prices were forecast to drift up another 5%, in line with the latest New Zealand home price poll forecast and a slight increase from 4.5% in the previous poll. “Although some residential markets across Australia have seen increasing values over the past few months, this has been due to the low number of homes available for sale,” wrote Michelle Ciesielski, head of residential research at Knight Frank.”As we approach the Spring selling season, we’re starting to see more listings come to market, which is likely to result in more choice for buyers. Most buyers have limited borrowing capacity compared to a year ago, which will likely see modest price growth over the coming months,” Ciesielski added.FIRST-TIME BUYERS A like-for-like analysis with the June survey showed all but two respondents had raised their average home price expectations for 2023. For 2024, three of 11 upgraded their predictions, four kept them unchanged, and the remaining four downgraded them.Rebounding house prices and higher mortgage repayments will continue to worsen purchasing affordability for first-time homebuyers over the coming year, according to 80% of analysts who answered an additional question.With many aspiring homebuyers kept away from ownership and remaining in the rental market, average lease prices were also expected to rise sharply.A popular destination for students and professionals, Australia has recently seen a resurgence in immigration, which will likely put more pressure on rental affordability, with all but one of 10 analysts who answered a separate question saying it would worsen.”Record low rental vacancy rates and double-digit growth in asking rents speak to the intensity of pressures,” noted Matthew Hassan, senior economist at Westpac. “Unfortunately, most indicators suggest the squeeze has longer to run with additional supply unlikely to come onto the rental market anytime soon.” Home prices in Sydney were forecast to rise 6.9% this year and 5.0% next, while prices in Melbourne, Brisbane, Adelaide, and Perth were expected to rise between 3% and 6% in 2023 and 2024. More
