The study by the property industry analyst and economic forecaster, Oxford Economics Australia, offers little good news for prospective first-home buyers in Sydney.
The city’s median house price rose by 10.3 per cent last year, surpassing its previous peak last December, the research said.
But Sydney’s real estate market could be in for a bumpy ride this year and possibly beyond due to high interest rates and lower clearance rates, Oxford Economics Australia says.
It points to the Reserve Bank of Australia’s decision to lift the cash rate to 4.35 per cent last November, a rise in current listings and softening auction clearance rates.
But the potential of cuts to interest rates later this year is expected to drive further growth in house price.
“The return of interest rate cuts will drive the next acceleration of price growth from late 2024,” said Oxford Economics Australia senior economist, Maree Kilray.
Sydney’s median house price is forecast to increase by 5.9 per cent over the two years to June 2026, while median unit prices are expected to jump by 8.3 per cent during the same period.
The median price is the sale price of the middle home in a list of properties ranked from highest sale price to lowest over a period of time.
The research said the federal government’s move to increase fees on foreign investors who buy Australian property but leave it vacant will be limited to certain Sydney suburbs.
Looking at house prices on the national level, Oxford Economics Australia says the country’s median house price hit a new record of $939,000 last December.
But it expects growth to slacken this year, pointing to national clearance rates falling from 70 per cent to 60 per cent, while monthly price growth has levelled off.
“Capital city performances have diverged in recent months,” said Kilray.
“Total listings have risen in Melbourne and Sydney, a trend we expect to continue in coming quarters, acting to slow price growth.”