Major banks expect property prices to keep rising into next year

What a difference a year makes. 

In August 2022, Westpac warned that national property prices would drop 8.0% in 2023 as the market was held “hostage” to the Reserve Bank of Australia’s tightening cycle. 

But reality has taken a very different turn than that gloomy prediction. 

According to CoreLogic’s home value index, prices have already rebounded by 4.1% in July from their February lows.

This, in turn, has prompted the major bank to revise its property market forecast upwards – not once, but twice. 

First was in April, when Westpac’s chief economist Bill Evans declared Australia’s housing correction “largely over” and predicted prices would remain flat in 2023. 

And still, home values continued to climb. 

So much so that, by August, Westpac had to significantly upgrade its price expectations yet again – with the bank now predicting a rise of 7% in home values by the end of the year (with a further 4% tipped for 2024).

In Sydney, Westpac expects growth of 10.0% this year and 6.0% in 2024 (see table).

Dwelling price forecasts

Westpac isn’t the only bank adjusting its forecasts either, with NAB also upgrading its predictions in its latest residential property survey, after home prices proved “surprisingly” resilient to higher interest rates.

“We have revised up our expectation for dwelling prices based on the recent resilience and outlook for strong housing demand in the near term, while supply growth continues to be challenged by higher rates and supply side pressures,” NAB chief economist Alan Oster said.

As a result, NAB now believes property prices in:

• Sydney will rise 6.9% this year and 4.9% in 2024

• Melbourne will rise 2.0% this year and 7.4% in 2024

• Brisbane will rise 5.4% this year and 2.9% in 2024

• Adelaide will rise 3.0%this year and 3.7% in 2024

• Perth will rise 6.0% this year and 6.2% in 2024

What does this mean for you?

Predicting the future is always uncertain. That said, if Westpac’s forecast does come to pass, Sydney prices could rise by as much as 16% by the end of 2024 from their value in January 2023. 

In dollar terms, that’s a $160,000 difference – suggesting that now could be a great time to buy, if your circumstances allow.

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