Add CategoryMortgage stress, however, is a main driver that could limit growth in house prices.
Australian house prices are set to surge by 2025 but there are opposing factors that are likely influence how things would turn out.
According to KPMG’s housing market forecast, house prices will rise nationally by 4.9% over the next nine months and then surge by 9.4% in the year to June 2025
Across the apartment segment, price growth will hit an average rise of 3.1% by next June and another 6% in the next 12 months.
The tables below show the projected gains in house and unit prices by 2025:
KPMG chief economist Dr. Brendan Rynne said even with elevated interest rates, the dominant force steering property prices in the short term will likely be limited supply — this is expected to lead to ongoing price increases in most markets throughout financial year 2024.
“House and unit prices will then accelerate further in the next financial year as dwelling supply continues to be limited, due to scarcity of available land, falling levels of approvals and slower or more costly construction activity,” he said.
The potential rate cuts moving into financial year 2025 are also likely to contribute to the growth in house prices.
However, Dr. Rynne said there are some factors on the opposite side, with mortgage stress being the most significant one.
“First-time buyers now need to use around half their earnings on mortgage payments — a significant rise from a third just three years ago,” he said.
Around $350bn of mortgages, or half of all fixed rate credit will expire this year, covering 880,000 Australian households.
Meanwhile, the remaining 38% of fixed rate credit, which includes about 450,000 loan facilities, will expire in 2024 and beyond.
“Some homeowners who previously locked in low rates might be unable to pay — and won't be able to refinance to a lower and competitive rate,” Dr. Rynne said.
Also read: Revealed: Key housing trends to watch out for
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Link | Compare |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.06% p.a. | $2,408 | Principal & Interest | Variable | $0 | $530 | 70% | |||||||||
5.95% p.a. | 5.95% p.a. | $2,385 | Principal & Interest | Variable | $0 | $0 | 90% | |||||||||
5.99% p.a. | 5.90% p.a. | $2,396 | Principal & Interest | Variable | $0 | $0 | 80% |
Important Information and Comparison Rate Warning
Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .
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