By H.Baloch 
Rising Australian House Prices will surpass general inflation in the next few years. Despite diminishing expectations of interest rate reduction. According to a survey of economists, who said the supply of affordable housing would continue to fall short of demand.
Australia is now among the most expensive housing markets in the world due to strong demand for homes and the inability of homebuilders to sufficiently boost supply. Therefore, it severely restricts choices for many potential homeowners.
Prices completely recovered those losses by the end of 2023, climbing 8.1% for the year in a rapid turn-around. Despite the Reserve Bank of Australia (RBA) jacking up interest rates to a 12-year high of 4.35% in late 2023. After a surge of more than 25% during the epidemic.
In separate polls, economists do not see the RBA lowering rates until the fourth quarter of this year.
Average estimate mostly unchanged since August 2023: the poll of 14 real estate experts conducted between May 10 and 28 predicted house prices to grow 5.3% this year. Analysts projected increases in 2025 and 2026 of 5.0%.
Particularly given shifting interest rates, housing markets never grow so regularly and continuously. Still, Australia’s property market has almost always exceeded experts’ projections. Backed by solid economic foundations, quite low unemployment, and a significant immigration flow.
Supply-demand mismatch takes precedence over the capacity-to-pay concern. Thus, according to My Bui, AMP’s economist, Australian property prices are showing quite modest but rather favorable increases.
We have underbuilt recently over two or three years. Therefore, even if the supply goes up from here, we will still have some undersupply that we need to make up for the last two years or so.
SHORTAGE OF DEMAND
When asked about the availability of reasonably priced houses over the next two to three years, all eight of the respondents said it would be less than demand. Four of the eight predicted it would fall far short.
For first-time buyers in the short future, supply restrictions, high mortgage rates, and already-high property prices imply affordability will deteriorate.
According to CoreLogic, the average asking price of an Australian house was $779,817 ($520,293.90), over eight times the average yearly income.
In Sydney, where prices were expected to climb 4.5% this year and 5.5% next, it is close to 12 times.
Michael Yardney of Metropole stated, “Sadly, it’s very difficult for first-time buyers since prices have gone up faster than they can save a deposit and quicker than they can enter the market.” “They are struggling as rents are rising and living expenses have increased. The affluent are growing wealthier, which is a drawback. Those who own real estate have seen value increase; in many instances, this is a double-digit increase over the last year. According to Yardney, the average pay of many people has not improved, and the price of real estate has climbed dramatically.
To assist Australians in overcoming the housing problem, the Anthony Albanese-led government has promised to create 1.2 million houses by 2030.
All analysts agreed that the government should become more active in lowering prices. “The government’s responsibility is to provide the underprivileged and disenfranchised citizens of Australia with social and public housing. Yardney remarked, “It hasn’t been doing that.”