As the new financial year approaches, a report predicts the expected rebound in property values will unfold in different ways across the country’s capitals — with houses in several cities seen to notch new record highs over the next 12 months.
Domain’s latest Forecast Report anticipates a “well-established and steady recovery” for the Australian housing market, with select capital cities anticipated to fully recover from the 2022 downturn.
“Following a financial year of elections, interest rate rises and initial signs of a recovery, we know that people are closely watching what’s to come for the housing market,” Dr Nicola Powell, Domain’s chief of research and economics, said.
According to Domain figures, the value of Australia’s housing market fell by 5 per cent across capital cities in 2022. The two biggest cities were at the forefront of the nationwide housing market decline, with Sydney dropping by -10.9 per cent and Melbourne down -5.9 per cent during the period.
Using a combination of a wide range of economic factors, property statistics and real-time behavioural data, the national property platform provided insights on what to expect for the financial year ahead.
In addition to combined regional areas, which provide forecasts on what to expect for both house and unit prices, here is a closer look at Domain’s predictions for how each capital city will perform in the next 12 months.
The report expects the harbourside city’s recovery will be “slow and steady” following the steep decline in values in 2022.
“House prices will be at a new record high by the end of the next financial year,” the report read.
While there will be a similarly slow but steady rebound in the city’s unit prices, Domain expects values in the sector will sit below the record hit in December 2021.
In the Victorian capital, Domain predicts house prices will remain relatively stable over the financial year.
“This means house prices will remain lower than the record average house price high of $1.094 million achieved in December 2021,” the report stated.
For unit prices in the city, the report expects more volatility if the forecast decline of 2 per cent to positive growth of 1 per cent materialises.
Looking north, the Queensland capital’s house prices are forecast to be near to a new record high by the end of the upcoming financial year.
If the projected growth of 0 per cent to 1 per cent materialises, units in the city are expected to offer greater stability than houses in the upcoming financial year.
This anticipated growth, coupled with the positive growth observed in the first half of 2023, suggests that unit prices will reach a new record high by the end of the next 12-month period.
Domain forecasts house prices in the South Australian capital are expected to reach a new record high at the end of the upcoming financial year, indicating the city may successfully sidestep a potential downturn in prices during 2022–2023.
Unit prices will grow slower than houses over the next financial year if the forecast growth of between 0 per cent to 2 per cent eventuates, putting them at a new record high at the end of FY24.
Houses in the West Australian capital will climb to a new record high at the end of the next financial year, according to Domain, showcasing the city’s continued strength and stability.
“Based on forecasts, Perth could avoid any material downturn in house prices,” the report read.
Looking at units, prices will continue to grow steadily over the next financial year.
In the nation’s capital, Domain predicts house prices will move into recovery over the next financial year if the forecast growth of between 2 per cent and 4 per cent comes to fruition.
“Canberra will retain its million-dollar title, with the median not predicted to slip below seven digits,” the report read.
Despite the capital retaining its million-dollar club membership, Domain predicts “it is almost certain the June 2023 quarter will see prices initially fall, to reach a trough. This is the largest decline across any capital city.”
Meanwhile, unit prices in the city will be more volatile than houses over the next financial year, with the report predicting a decline of 1 per cent up to a growth rate of 2 per cent.
House prices in the Tasmanian capital, Domain predicts, will be “in a well-established recovery over the next financial year”.
“The recovery is forecasted to be slow and steady, taking more than five-quarters of growth to recoup the value lost,” the report stated.
As for units, Domain forecasts prices in the sector will be at a new record high by the end of the upcoming financial year.
“Even at the lower range of 1 per cent growth, Hobart unit prices will be close to a new record high,” the report stated.
Article source: www.smartpropertyinvestment.com.au