House prices set to climb $100,000 in 2 years.

According to analysis by PropTrack and KPMG, the cost of housing could increase by over $100,000 in the next two years. This would drive prices past their previous peaks, achieved by record low interest rates during the pandemic in early 2022.

This is despite existing affordability issues and continually increasing interest rates. This would put average prices in Sydney at $1.53 million and Melbourne by $1.02 million by 2025.

Housing affordability has been an issue that has garnered a lot of attention recently. Lack of supply of stock is a key factor in the increasing prices, which has been made worse recently due to a construction sector suffering from rising costs, strangled international supply chains and companies going into liquidation.

Immigration has been playing catch-up since the closing of the borders in 2020-21 in an effort to fix domestic supply issues, which is adding to the pressure on established property prices as well as rentals.

PropTrack economist Eleanor Creagh has stated that the gap between the expected number of immigrants arriving and the number of houses available to them is too large. The ABS predicts about 300,000 migrants could arrive by the end of 2023, while only 170,000 homes were constructed.

As long as demand continues to outstrip supply, upwards pressure on prices will remain.

Of course, increasing prices are welcome by home owners and investors who are not struggling as it means their net wealth continues to grow.

However, if need to purchase a new home, whether that be a first home buyer, or an upgrader, or you are looking for an investment, you may need to adjust your budgets.

Combining this with a rate cycle that continues its upward trend due to stubbornly high inflation, houses will remain as un-affordable as they ever have been.

One way to reduce the cost of housing is to find a home loan with a low rate. I have over 35 lenders available to me, which means I will find the best rate possible for you. So if you’re looking to buy or invest, get in touch today.