Key facts
- Australian home prices are expected to grow by 1.0% this year, the weakest growth since 2022.
- Higher mortgage rates and cost-of-living pressures are reducing demand.
- Median home values are approximately A$940,000, about eight times average household income.
- Sydney and Melbourne prices are forecast to fall 2%-3%, while Adelaide, Brisbane, and Perth are projected to gain 6%-11%.
- Urban rents are forecast to rise 4%-6% over the coming year.
Australian home prices are expected to experience their weakest growth since 2022, with a median increase of only 1.0% anticipated for this year. This slowdown is driven by persistent inflation, elevated borrowing costs, and reduced consumer confidence, which are squeezing household budgets and dampening demand, particularly among first-time buyers. The Reserve Bank of Australia has raised interest rates by 75 basis points this year to combat inflation, further impacting affordability. Median home values stand at approximately A$940,000, roughly eight times the average household income. Price trends are expected to differ across major cities, with Sydney and Melbourne anticipating declines of 2%-3%, while Adelaide, Brisbane, and Perth are projected to see gains of 6%-11%. The government's tax reforms, including changes to capital gains tax discounts and negative gearing, may also affect rental supply and affordability. Urban rents are forecast to rise 4%-6% in the coming year, outpacing the current inflation rate.