Australia home prices forecast weakest growth in four years as rates rise

A Reuters poll of property analysts predicts Australian home prices will record their slowest growth since 2022, with a median rise of just 1.0% this year and forecasts ranging from a 5% decline to a 7% gain. The slowdown follows three interest‑rate hikes totalling 75 basis points by the Reserve Bank of Australia, which have tightened mortgage costs and strained household budgets.

Analysts expect price trends to diverge by city: Sydney and Melbourne are projected to slip 2‑3%, while Adelaide, Brisbane and Perth could see gains of 6‑11%. The Albanese government’s new tax reforms—replacing the 50% capital‑gains discount with inflation‑indexed taxation and curbing negative gearing—have raised concerns about reduced rental supply and higher rents. Urban rents are forecast to rise 4‑6% over the coming year, outpacing the 4.2% headline inflation rate.

The poll also notes a similar flattening of home‑price growth in New Zealand, where the Reserve Bank of New Zealand is expected to raise rates next quarter.