Australia’s property market is in a state of flux, with Perth poised to join the million-dollar median house price club. According to Domain’s forecast report, Perth’s median house price is anticipated to hit $982,000 by June next year, with expectations to surpass $1 million by the end of 2026. This growth is attributed to a combination of factors, including lower interest rates, robust income growth, and a surge in population.
Nicola Powell, Domain’s chief of research and economics, highlighted Perth’s momentum, driven by favorable economic conditions that have made housing more affordable compared to other major cities. This affordability factor has given buyers in Perth a lower mortgage burden, fostering sustained demand and market resilience.
Elsewhere in Australia, Domain predicts a general uptrend in house prices, albeit at a more moderate pace compared to the pandemic-induced boom. Sydney is expected to lead the charge with a projected 7% increase, pushing its median house price to a record $1.83 million. Melbourne is also on track for growth, set to recover fully from its downturn with a 6% increase to reach $1.11 million.
Brisbane and Adelaide are forecasted to reach new price highs, with expected growth rates of 5% and 4%, respectively. Canberra is anticipated to see a 4% rise, although still below its 2022 peak. Powell noted that while all capital cities are likely to experience price escalations, the rate of growth will be more subdued due to affordability constraints.
Factors such as chronic housing undersupply, first-time buyer support, and relative affordability have underpinned the recent price surges in cities like Adelaide, Brisbane, and Perth. However, the diminishing affordability advantage, coupled with economic uncertainties, may temper future price increases across the board.
Lower interest rates, a key driver of price growth, have been complemented by government initiatives targeting first-time buyers. These schemes, including the removal of lenders’ mortgage insurance, have facilitated market entry for many, particularly in more affordable regions.
Looking ahead, Domain’s forecast suggests that housing shortages will persist into 2026, with construction delays and labor shortages impeding supply. While population growth is expected to slow marginally, rental activity, wage increases, and limited housing stock are likely to maintain upward price pressure.
In conclusion, Australia’s property market is evolving, with Perth poised for a significant milestone in its housing market trajectory. As cities nationwide navigate economic uncertainties and affordability challenges, the housing sector remains a dynamic landscape shaped by a myriad of factors, from interest rates and government policies to supply chain disruptions and demographic shifts.
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