If streaming platforms are starved for content because of the writer’s strike in Hollywood, they should just look to the Australian property market for inspiration.
If streaming platforms are starved for content because of the writer’s strike in Hollywood, they should just look to the Australian property market for inspiration. With more plot twists than the Succession finale, rising interest rates, surging migration, and low housing supply have made forecaster’s jobs particularly difficult this year.
As Sydney’s housing market continues to outperform expectations, Australia’s leading economists have been forced to revise their property price predictions for 2023. The latest to do so is Westpac, announcing they now expect Sydney house prices to rise as much as 10% this year. That’s a significant increase of 10x from their April forecast—which predicted a rise of just 1% this year.
Citing record level migration, a competitive rental market and scant housing supply, Westpac further lifted numbers nationally, predicting a 7% rise in housing prices across Australia in 2023 and addition 4% growth in 2024. Despite having to drastically revise this year’s prediction within a four-month period, they’ve even projected as far as 2025, estimating a further 4% rise in house prices.
It appears four is the magic number looking forward, with dwelling prices having risen 4% over the year to date across all five major capital city markets. The strongest growth can be seen in Sydney and Melbourne, where there has been a sharp acceleration in population growth. The inflow of migration over the past year has strongly influenced the housing market upturn in both cities, as swelling populations tighten rental markets and put stress on an already dwindling ‘on-market’ supply.
Westpac’s revised forecast of a 10% increase in property prices is significantly higher than its peers, with NAB re-forecasting a 4.7% rise in July, and CBA economists revising their outlook in May to a 5% jump in house prices. This time last year, CBA was projecting national dwelling prices would have fallen 15% by now—before it became clear that demand for housing far outweighed supply.
Despite four RBA rate hikes over the past six months, market gains have been well sustained, with Australia’s home price rebound quickening in the June quarter at the fastest rate since 2021. Median house prices rose $500 a day in Sydney during the first half of this year, though they only increased by 0.9 in July, representing the smallest gain since values began rising in February.
Some are starting to question if perhaps Sydney’s price growth may already have peaked—a concern which Westpac have taken into consideration. Westpac’s senior economist, Matthew Hassan, noted there was “some fragility” in the rebound in prices, stating that “If and when sellers come back, a shift in the supply-demand balance will test the ‘depth’ of demand, and price gains may prove harder to sustain. Indeed, some of these dynamics already look to be coming into play in the Sydney market.”
Will economists have to get the red pen out again to make further revisions? The next few months will tell.
