Key Facts:


– According to a survey by the Reserve Bank, homeowners can expect their market values to rise by an average of 4.8 percent over the coming year.
– The survey panel predicts that house prices will rise by an average of 4.84 percent in the next 12 months, and another 6.22 percent the following year.
– First-home buyers accounted for 27 percent of purchases in the September quarter, but rising house prices and high interest rates may hinder their ability to enter the market.
– Factors such as inbound migration and the incoming government’s promised tax changes for landlords and foreign buyers are contributing to the forecasted rise in house prices.

Article Summary:


The return of first home buyers to the market is expected to be short-lived as house prices are forecasted to rise significantly. According to a survey by the Reserve Bank, property values are predicted to increase by an average of 4.8 percent over the next year. This is a stark contrast to the anticipated consumer price index growth of 3.6 percent. While this may be good news for homeowners, it poses challenges for those looking to enter the property market. First-home buyers accounted for 27 percent of purchases in the September quarter, but rising house prices and high interest rates will make it difficult for them to afford a home.

The survey respondents attribute the expected rise in house prices to factors such as inbound migration and the promised tax changes for landlords and foreign buyers by the incoming government. Economists on the panel have various predictions for house price inflation, with some forecasting an increase of up to 9 percent in the coming year. Gareth Kiernan from Infometrics describes housing as “horribly unaffordable” and calls for sustained efforts to improve the supply of housing and land.

While the survey’s predictions have aligned with actual changes in the CoreLogic house price index, there is concern about the sustainability of stronger growth in house prices. Affordability issues, debt-servicing costs, low yields for investors relative to interest rates, and a potential fall-off in migration could reverse any outsized price increases in 2025. The impact of the new government’s tax policy changes on the housing market remains uncertain, but it is expected that the uptrend in prices will attract more interest from investors.

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