House prices unperturbed until 2026 amid stubborn interest rates: ANZ

ANZ now anticipates capital city house prices will rise between 6% and 7% in 2024, 5% to 6% in 2025, and around another 5% in 2026.

While slightly higher than the bank's prior predictions, such growth is below the 9.6% rise recorded in 2023, largely due to a slow down in growth of Sydney and Melbourne property values.

Meanwhile, ANZ became the first big four bank to quash anticipation of a 2024 interest rate cut this week.

It now expects the Reserve Bank of Australia (RBA) board to cut the cash rate for the first time in February, three months later than was previously predicted.

Hope for a nearer-term rate cut was wooed on the back of sturdy household consumption, strength in the jobs market, and government consumption continuing to bolster the economy.

"It's not that monetary policy isn't working. It is," ANZ head of Australian economics Adam Boyton said.

"However, getting an appropriate balance between the level of demand and supply is likely to take a little longer than expected."

ANZ still anticipates three rate cuts in 2025, bringing the cash rate from its 13-year high of 4.35% to 3.60%.

The sights of CommBank, NAB, and Westpac remain firmly set on a November cut.

75 basis points of interest rate relief could ease the strain felt by budgets across the nation.

If cash rate cuts were passed on to borrowers in full, a mortgage holder with an average new home loan and a typical interest rate could save over $300 a month.

Home Loan Amount	Interest Rate (p.a.)	Monthly Repayments
$626,000	6.4%	$3,916
$626,000	5.65%	$3,613

The average new home loan was valued at $625,791 in April 2024, according to ABS figures. As of March 2024, the typical interest rate on a new owner-occupier home loan was 6.4% p.a., based on RBA data. Monthly repayments calculated using Your Mortgage's Mortgage Repayment Calculator.

However, while those looking to enter the market might in the near-enough future be able to realise a lower interest rate, they could also be facing notably higher house prices.

If ANZ's price forecasts come to fruition, the median house price in the capital cities - which ended 2023 at just over $832,000, per CoreLogic figures - could surpass $990,000 in the next three years.

ANZ's expectations are slightly above those of Westpac, which is forecasting house prices to rise 6% this year and 4% next.

Perth, Adelaide & Brisbane house prices to soar up to 20% in 2024

Perth is the only capital city in which ANZ expects 2024 house price growth to outpace that of 2023.

Property prices in the city climbed more than 16% last year, with this year's housing shortage tipped to drive prices up another 20% to 21%.

That pace of growth is expected to slow to around 7% in 2025 and again to approximately 5% in 2026.

Property values in Brisbane and Adelaide are also expected to outperform this year, tipped to rise between 9% and 10%, with growth slowing to around 5% per annum in 2025 and 2026.

"Since the beginning of the COVID-19 pandemic the growth in the population of WA and Queensland has been faster than the growth in the estimated dwelling stock, increasing any relative supply and demand imbalance that existed in 2020 and putting upwards pressure on housing prices," ANZ senior economist Blair Chapman said.

Melbourne and Sydney property value growth tipped to slide

Simultaneously, growth in house prices in Australia's two largest cities is anticipated to slump in 2024, before lifting to match that of Brisbane, Adelaide, and even Perth by 2026.

"Victoria's dwelling stock has, we estimate, grown faster than the state's population since early 2020," Mr Chapman said.

"This is putting less pressure on housing prices to increase in Victoria.

"The growth in New South Wales's estimated dwelling stock has also outpaced population growth but to a lesser extent."

_{Image by Nathan Hurst on Unsplash}

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