By Stephen Johnson, Economics Reporter For Daily Mail Australia
16:01 30 Sep 2023, updated 16:07 30 Sep 2023
- KPMG expecting house price surge
- Immigration credited with boost
- Mark Bouris sees investors gaining
- READ MORE: Westpac’s forecast
Australian house prices are expected to soar over the next two years because of record-high immigration and a very tight rental market.
Yellow Brick Road executive chairman Mark Bouris said high immigration would particularly benefit Australians wanting to invest in property.
The mortgage broking tycoon told Daily Mail Australia ‘for investors it definitely is’ a good time.
The property market is recovering despite 12 interest rate rises since May 2022.
Mr Bouris said high immigration would particularly benefit investor landlords – at the expense of renters – with the national vacancy rate at a very tight 1.2 per cent.
HOBART: A 14.2 per cent increase in the year to June 2025 – taking median house price to $835,362
MELBOURNE: A 12 per cent increase in the year to June 2025 – taking median house price to $1.080million
SYDNEY: A 10.3 per cent increase in the year to June 2025 – taking median house price to $1.529million
CANBERRA: A 9.4 per cent increase in the year to June 2025 – taking the median house price to $1.090million
PERTH: An 8.8 per cent increase in the year to June 2025 – taking median house price to $726,261
ADELAIDE: A 6.8 per cent increase in the year to June 2025 – taking the median house price to $804,996
DARWIN: A 5.1 per cent increase in the year to June 2025 – taking the median house price to $606,422
BRISBANE: A 4.2 per cent increase in the year to June 2025 – taking the median house price to $864,204
Sources: KPMG, CoreLogic
‘All it’s going to do is put more pressure on rents, upward pressure, so investors… are definitely interested in buying property and renting it out,’ he said.
‘There is nowhere, unfortunately, for these people coming to Australia to live and most of them have to rent initially.’
A record 454,400 migrants moved to Australia in the year to March, with international students returning in droves as recruiters hire skilled migrants to fill labour shortages.
This is already higher than Treasury’s Budget forecasts of 400,000 new permanent and long-term overseas arrivals in the 2022-23 financial year.
The federal government is expecting 1.5million foreigners to move to Australia in the five years to July 2027.
With inflation still on the high side, interest rates are expected to stay on hold throughout 2024 and into early 2025 at the present 11-year high level of 4.1 per cent.
Despite that, KPMG’s Residential Property Market Outlook report is forecasting a surge in property prices from the end of 2023, which would continue into mid-2025 because of record-high immigration.
‘The post-pandemic recovery in immigration is expected to add significant pressure to housing demand,’ the report by economists Brendan Rynne and Brian Tran said.
‘Robust population growth and limited housing supply are poised to exert more pressure on the rental market.’
Hobart is predicted to see the highest growth in property prices as smaller capital cities receive more interstate migration than other parts of Australia.
Hobart house prices were expected to fall by 3.5 per cent in 2023 but recover next year to be 6 per cent higher in June 2024, jumping to 11.3 per cent by December 2024 and 14.2 per cent by June 2025.
This would see the median house price rise from $690,085 to $835,362.
Melbourne, another city receiving a big share of new foreign arrivals, is forecast to see property prices rise by 12 per cent by June 2025.
That forecast would see Melbourne’s mid-point soar from $918,971 in June this year to $1.080million by mid-2025.
Sydney, which receives a bigger share of new migrants, was expected to see its median house price climb by 6.2 per cent in the year to December 2023.
The annual growth was expected to slow to 4.7 per cent by June 2024 but rise again to 6.6 per cent by December 2024 and surge to 10.3 per cent by June 2025.
Should that prediction materialise, Sydney’s median house price would grow from $1.324million in June 2023 to $1.529million by mid-2025, based on CoreLogic data.
Canberra house prices were expected to rise by just 1.2 per cent in 2023, but accelerate to 4.4 per cent in June 2024, 7 per cent in December 2024 and 9.4 per cent by June 2025.
This would see median house prices in the national capital rise from $954,079 to $1.090million.
Perth house prices were expected to soar by 8.2 per cent in 2023, before the annual growth pace rose to 8.4 per cent in June 2024, 8 per cent in December 2024 and 8.8 per cent by June 2025.
This would see the city’s mid-point house price rise from $615,793 to $726,261 in just two years.
Adelaide, one of Australia’s strongest-performing housing markets, was expected to enjoy a 6 per cent increase in 2023, followed by a 5.8 per cent rise in June 2024, a 5.6 per cent rise in December 2024 and a 6.8 per cent increase in June 2025.
This would see Adelaide’s mid-point house price rise from $712,421 to $804,996
Darwin in Australia’s tropical north was expected to buck the trend, with prices falling by 3.98 per cent in 2023, before dropping by another 1.5 per cent in June 2024, but rising by 2.5 per cent in December 2025 and by 5.1 per cent in June 2025.
The price increase over two years would be more modest, rising from $585,782 to $606,422.
Brisbane house prices were expected to climb by 3.7 per cent in 2023, slowing to 2.8 per cent in June 2024, 2.6 per cent in December 2025 before edging up to 4.2 per cent in June 2025.
This would see the city’s house price climb from $806,781 to $864,204.
Mr Bouris said he’s no longer worried about mortgage stress where borrowers can’t pay their bills leading to forced sales as ultra-low two per cent fixed interest rate periods expired.
‘Initially, my thesis was it would but it hasn’t happened,’ Mr Bouris said.
‘We’re in the middle of the cycle of people having to go from fixed to variable and there hasn’t been any marked increase, in terms of arrears and delinquencies.
‘There’s been a slight increase but it’s still historically low so just on my own business, we’re seeing a couple of hardship requests – maybe four or five, I’m not talking about hundreds or thousands.
‘I’m not seeing any mortgage stress at the moment.
‘People have accumulated savings, people have got two or three jobs and an extra job or extra hours, unemployment is really low (3.7 per cent) relatively speaking.’
Mr Bouris said history would also kindly judge former Reserve Bank governor Philip Lowe, who finished up on September 17.
‘A lot of people criticised the RBA governor, the outgoing one – maybe time will tell he was pretty competent given where inflation seems to be heading at the moment,’ he said.
Inflation in August rose to 5.2 per cent, up from July’s 4.9 per cent, but it’s well below the 32-year high level of 8.4 per cent reached at the end of 2022.
By Danyal Hussain For Daily Mail Australia
14:43 15 Feb 2023, updated 15:50 15 Feb 2023
- Mark Bouris sold his home in crisis in the 90s
- He thinks many Aussies will have to do the same
- Said he has been inundated with desperate messages
One of Australia’s top mortgage lenders has issued a dire warning to homeowners after interest rates reached a 10-year high: Sell now before it’s too late.
Businessman and ex-Celebrity Apprentice host Mark Bouris told Daily Mail Australia he was forced to sell his house when interest rates hit a record 17.5 per cent and the country plunged into recession in 1990 – and warned history may be set to repeat.
Reserve Bank governor Philip Lowe on Wednesday told a Senate hearing in Canberra this month’s ninth consecutive interest rate hike – taking the cash rate to 3.35 per cent – would be far from the last.
Average borrowers on a 30-year loan term are now paying $3,303 a month – a 43 per cent jump from $2,306 in May 2022 – and further rate rises this year are all but certain.
Mr Bouris, one of Australia’s top financial advisors and founder of mortgage lender Wizard Home Loans, said today’s hikes reminded him of 1990 when interest rates hit record highs and he was forced to sell his home.
He said families today need to ‘bite the bullet’ and consider doing the same because the worst could be yet to come.
‘My kids were young and we had to move out and rent a place. That wasn’t great. They wanted to know why we were leaving and I had to explain it,’ he told Daily Mail Australia.
‘[My wife] would ask when would we have the security of our own place again … I was a young guy and I felt a bit embarrassed about the situation.’
Mr Bouris said his family spent four or five years in the rental home before finding their feet and getting back on the buyers’ market.
He said the struggle of selling the family home and moving into a rental was tough, but it was the right decision for their future.
‘You’ve got to bite the bullet sometimes and realise that selling now is probably better than selling later,’ he said.
‘I had to sell my home and I think a lot of Australians are in a similar place this time. Don’t feel embarrassed. Sometimes, it’s just how it is.’
Mr Bouris published a video on TikTok where he asked Aussies struggling with interest rate hikes to get in touch.
Within a few hours, he was inundated with messages.
‘I’ve had to actually put up another post saying please just hold off sending because I’ve had hundreds of responses,’ he said.
‘I’ve had responses from people struggling because of all sorts of circumstances.
‘There’s domestic violence where people had to move out or one of the partners has had to leave and the other is left with the mortgage and can’t maintain it on a single income.
‘Others have had problems with businesses … because of COVID – and they can’t now afford to pay the new interest rates.
‘I’ve had literally hundreds [of messages] and I’ve probably replied to maybe 60 – but each one requires a fair bit of time and effort.’
He said one of the major issues he’s come across is the new variable rate kicking in.
The era of the record-low 0.1 per cent interest rate in 2021 saw borrowers take advantage of home loan rates of two per cent or lower.
But now more than 800,000 loans, temporarily fixed with those ultra-low interest rates, will expire this year – and those mortgage holders will face a massive increase in repayments.
Meanwhile, Dr Lowe told the Senate hearing on Wednesday the situation for homeowners would get worse before it gets better.
‘There is a risk that we have not yet done enough with interest rates and spending is more resilient and that inflation stays high,’ he said.
‘If inflation stays high, it’s very damaging for the economy, it worsens income inequality, it makes it harder for businesses to plan, it erodes the value of people’s savings, it’s corrosive for the economy.’
Dr Lowe warned worsening inflation would lead to even higher prices and higher unemployment, referencing the early 1990s when the jobless rate hit double-digit figures even after a recession.
‘We’ve got to be attentive to the risk from higher inflation – it’s more than 30 years since we had higher inflation, I think many people have forgotten the really, serious damage that does to people, to livelihoods, the functioning of the economy if it persists,’ Dr Lowe said.
Dr Lowe acknowledged it was ‘really, really hard for some people’ who would have to battle ‘a very big increase in their mortgage payments’.
However he noted that he had to tackle inflation running at a 32-year level of 7.8 per cent to avoid a repeat of 1990 when wages growth failed to keep pace with price rises.
‘When we’re raising interest rates… it’s unpopular in large parts of the community, particularly given the history of the lower interest rates over the years,’ he said.
‘It is unpopular and it’s the job of the central bank to do what’s unpopular in the national interest and that’s what we’re doing.
‘If we don’t get on top of this, the pain will be worse.’
But Dr Lowe, who is on a $1,037,709 remuneration package, said he understood borrowers were doing it ‘really, really tough’.
‘I read those letters and hear those stories with a very heavy heart,’ he said.
‘I find it disturbing. People are really hurting, I understand that, but I also understand that if we don’t get on top of inflation it means even higher interest rates and more unemployment.’
Mr Bouris hit out at the government and Reserve Bank for putting Aussies in the position of having to sell their homes – and offered advice for those struggling with rising mortgages.
‘If I was in that position, if that was me, knowing my circumstances, I would sell now rather than sell in six months time because I think the chances are that you get a better price now,’ he said.
‘I don’t see why the government should put people through that. The government have raised outstanding amounts of taxes over the last couple of years .
‘The government is in a position to probably give a little bit back to those people who are going to suffer during this inflation fighting period.’
Mr Bouris was unimpressed with the government’s actions tackling the crisis and said its policies during Covid made the situation worse.
‘Governments cause inflation because they give money and people think, “oh, that’s free money. I’ll go and spend it”,’ he said.
‘During Covid, they gave the bank’s money to lend money to people to buy houses. They gave it to banks really cheap. So therefore, the banks pass that on to borrowers really cheap. We gorged ourselves with cash and then we gorge ourselves once the lockdown closed off.
‘We gorged ourselves with luxury. We went on holidays, we bought second-hand cars, we bought four wheel drives, televisions, we just rewarded ourselves ridiculously and that is human behaviour.
‘Both the government and the Reserve Bank created inflation. Now they are trying to fix inflation and mortgage holders are going to pay it. I just think that’s really unfair.’
As a solution, he called on the government to offer a rebate to mortgage holders.
‘If you have a rebate off tax for a mortgage, let’s say a million or less, then that will help them keep their heads above the water while interest rates keep rising,’ he said.
‘Make it $2,000, for example. That $2,000 you then make an application to the Tax Office for. The $2,000 rebate will be distributed to you and it will help borrowers who need it.
‘I think that’d be a great economic policy for the government to bring out the next budget, it makes sense.’
Finance guru David Koch explodes over interest rate debacle and says EVERY Australian who took Reserve Bank Governor’s ‘derelict’ advice should get their loan guaranteed
Sunrise host David Koch has called on the government to guarantee every home loan taken out on the ‘derelict’ advice of Reserve Bank Governor Philip Lowe that interest rates would not rise until 2024.
The Reserve Bank Governor will face a grilling in federal parliament on Wednesday over the nine rapid rate interest rises that have have occurred since he forecast that they would not go up until 2024.
Interest rates rose to 3.35 per cent last week – the highest they have been in 10 years.
The succession of interest rate rises mean thousands of households are facing the so-called mortgage cliff, as low fixed-rate mortgage deals expire and the higher interest payments begin.
Koch said many who invested on Mr Lowe’s erroneous forecast could lose their homes.
‘All of these Australian households, imagine the emotional pressure you would be going under at the moment, facing the prospect of a sale on your house,’ he said on the Channel Seven breakfast program on Wednesday.
‘It would be destroying families and destroying relationships. That’s the human side of it.’
Koch proposed the Albanese government should go to the banks and say ‘we will guarantee these people’s loans because they followed the derelict advice of the Reserve Bank’.
‘They’ve still got to paying their loans but many of them are in negative equity and the bank will be on the verge of selling them out,’ Koch said.
‘It’s not a handout, it’s just saying to the bank, don’t close them down, we will guarantee it until things improve.’
Negative equity occurs when a property is valued at less than the loan taken out to purchase it.
Koch’s Sunrise co-host Natalie Barr initially raised her eyebrows in shock at the suggestion but by the end of the explanation she was nodding in agreement.
The Reserve Bank Governor will face Senate Estimates on Wednesday.
Last week, the Reserve Bank lifted interest rates to 3.35 per cent, in the latest increase.
For those coming off fixed rate deals this could mean a jump from paying 2 per cent of their loan to over 5 per cent.
This means an extra $1,114 for a borrower with an average $600,000 home loan who is coming off an ultra-low fixed rate of 2 per cent and moving on to a new 5.26 per cent variable rate mortgage.
Dr Lowe will be questioned by the economics legislation committee as the Reserve Bank foreshadows more interest rate rises to rein in inflation, which grew by 7.8 per cent annually in the December quarter.
The federal government is concerned about the 800,000 mortgage holders on fixed rates yet to feel the full brunt of increasing rates.
The future of the RBA’s leadership has also come under question ahead of the treasurer’s decision on whether to extend his term in the second half of 2023.
Senate grilling for RBA boss
Reserve Bank Governor will face two days of questioning by parliamentary committees over the rapid interest hikes.
On Wednesday he will front a Senate estimates committee. committee and on Friday it will be a House of Representatives committee.
Beginning in May the bank has lifted the cash rate nine successive times to 3.35 per cent.
Dr Lowe said in November of 2020 that interest rates would stay on hold until 2024 but apologised for this comment last November.
His seven-year term as RBA governor is set to expire later this year with speculation mounting Treasurer Jim Chalmers may not extend it.
Several MPs, including Labor backbenchers, have questioned the future of Dr Lowe based on the RBA’s predictions issued during the pandemic that interest rates would not rise until 2024.
Treasurer Jim Chalmers has refused to comment on Dr Lowe’s future as Reserve Bank governor.
The RBA is also subject to an independent inquiry, with the findings due in March.