Canberra house prices are set to rise 4.4 per cent over this financial year before surging 9.4 per cent in the year to June 2025, a report by KPMG has found.
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However unit prices in the ACT are likely to see a much milder rate of growth.
KPMG has released a report forecasting the growth of capital city property prices over the next two years.
The growth predicted for Canberra house prices is largely in line with national expectations, but lagged behind other capital cities.
Hobart is expected to see the largest jump in house prices for the year to June 2025, with KPMG predicting a rise of 14.2 per cent. Melbourne and Sydney house prices are expected to rise 10.3 per cent and 12 per cent respectively.
Canberra unit prices are poised to rise just 0.9 per cent by the end of this financial year and 2.8 per cent in the year to June 2025.
Hobart units are again tipped to lead the price rise, with 8.7 per cent growth forecast this financial year followed by a 10 per cent rise in the year to June 2025.
What's behind the growth?
Despite high interest rates, constrained supply would push house prices up over the current financial year, KPMG chief economist Dr Brendan Rynne said.
"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.
Stronger migration and foreign investment, higher rental costs and anticipated cash rate cuts were among the other factors that could push prices up.
Speaking to The Canberra Times, Dr Rynne said Canberra's "relatively soft growth" predictions compared to the rest of the country were due to consistent construction activity.
"Canberra's actually had a relatively strong level of construction activity ... that has enabled supply within the region to really be a bit stronger given the population growth that you've been experiencing than the previous decade," he said.
"So what that's also done is enabled rental growth within Canberra to be a lot more contained compared to other capital cities."
Interest rates could fall in 2024
KPMG is anticipating just one more cash rate rise before a peak of 4.35 per cent. But even that was a conservative estimate, Dr Rynne said.
"It could be that interest rate increases are done, that we are at the top of the cycle," he said.
It that were the case, property price growth could be even stronger than the report suggested.
The Reserve Bank was expected to begin lowering the cash rate at the end of 2024, Dr Rynne said, down to 3.85 per cent by mid 2025.
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