Major banks predict continued gains for property values
House prices in Australia are expected to continue rising, with major banks upgrading their forecasts for the next two years.
The outlook comes as national dwelling values increased for the sixth consecutive month, driven by limited housing supply, improved market sentiment, and recent reductions in interest rates.
According to the latest Home Value Index from property analytics firm Cotality, national dwelling values rose 0.6% in July to $844,197. Monthly growth has remained steady at just above half a percent since May, reflecting ongoing demand despite affordability challenges and economic uncertainty.
ANZ has revised its projections, now anticipating capital city house prices to increase by 5% in 2025 and 5.8% in 2026. The Commonwealth Bank of Australia (CBA) also updated its outlook, forecasting a 6% rise in 2025 (up from 4%) and a 4% increase in 2026 (down from 5%).
Reserve Bank of Australia (RBA) governor Michele Bullock commented on the factors influencing the housing market. “We have seen a fairly gradual recovery in housing activity broadly,” she said.
“We hope [the property price increase] happens in a nice measured way, but ultimately, we can’t control what happens there. Property prices are about supply and demand ultimately and we don’t control that.”
The recent interest rate cut by the Reserve Bank have contributed to the positive outlook, with the official cash rate now at 3.60%. Lower mortgage rates are expected to provide some relief for homeowners, with repayments on a $500,000 loan estimated to fall by around $80 per month if lenders pass on the full reduction.
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