Invest
House prices set to rise by 25 per cent, economist hints
National house prices could surge by as much as 25 per cent as the low cost of credit makes mortgages reach affordability levels not seen since 2002, according to an economist.
House prices set to rise by 25 per cent, economist hints
National house prices could surge by as much as 25 per cent as the low cost of credit makes mortgages reach affordability levels not seen since 2002, according to an economist.
BetaShares’ estimates are based on the median capital city national established house price, combined after-tax income for a male and female couple earning average ordinary time earnings, a 10 per cent housing deposit and the average bank mortgage rate for new owner-occupier loans.
As at the June quarter, the estimated median national house price was $700,000, average after-tax income around $135,000 – with the prevailing relevant mortgage rate for new loans (at present) around 2.9 per cent.
That implies that 26.2 per cent of after-tax income would have to be devoted to meeting mortgage repayments on a 25-year loan, compared with an average since mid-2004 of 32.8 per cent.
Based on current interest rates, national house prices would have to rise by 25 per cent from June quarter levels to reduce mortgage affordability to the average level since mid-2004, BetaShares chief economist David Bassanese said.
For affordability to be reduced to the recent lows in 2010 and 2017, house prices would have to rise by 35 per cent.
“History suggests that the way the market will find equilibrium under these circumstances is through a lift in house prices, until mortgage affordability for the marginal buyer is reduced to at least the long-run average – if not pushed to previous trough levels if a bubble mentality develops,” Mr Bassanese said.
The economist points to 2002 when house prices surged due to affordability.
“The last time our national mortgage affordability estimate was better than this was in March 2002. In the following two years, national house prices rose 36 per cent. What we know from history is that when mortgage rates drop, new home buyers don’t just pocket the savings – they simply bid more for properties as their affordability limit has improved,” the economist said.
The economist also said that the RBA’s comments around not lifting interest rates for up to three years or until they reach the 2 to 3 per cent inflation target band is also likely to spur on the housing market.
RELATED ARTICLES
About the author
About the author
Property
Multigenerational living is moving mainstream: how agents, developers and lenders can monetise the shift
Australia’s quiet housing revolution is no longer a niche lifestyle choice; it’s a structural shift in demand that will reward property businesses prepared to redesign product, pricing and ...Read more
Property
Prestige property, precision choice: a case study in selecting the right agent when millions are at stake
In Australia’s top-tier housing market, the wrong agent choice can quietly erase six figures from a sale. Privacy protocols, discreet buyer networks and data-savvy marketing have become the new ...Read more
Property
From ‘ugly’ to alpha: Turning outdated Australian homes into high‑yield assets
In a tight listings market, outdated properties aren’t dead weight—they’re mispriced optionality. Agencies and vendors that industrialise light‑touch refurbishment, behavioural marketing and ...Read more
Property
The 2026 Investor Playbook: Rental Tailwinds, City Divergence and the Tech-Led Operations Advantage
Rental income looks set to do the heavy lifting for investors in 2026, but not every capital city will move in lockstep. Industry veteran John McGrath tips a stronger rental year and a Melbourne ...Read more
Property
Prestige property, precision choice: Data, discretion and regulation now decide million‑dollar outcomes
In Australia’s prestige housing market, the selling agent is no longer a mere intermediary but a strategic supplier whose choices can shift outcomes by seven figures. The differentiators are no longer ...Read more
Property
The new battleground in housing: how first-home buyer policy is reshaping Australia’s entry-level market
Government-backed guarantees and stamp duty concessions have pushed fresh demand into the bottom of Australia’s price ladder, lifting values and compressing selling times in entry-level segmentsRead more
Property
Property 2026: Why measured moves will beat the market
In 2026, Australian property success will be won by investors who privilege resilience over velocity. The market is fragmenting by suburb and asset type, financing conditions remain tight, and ...Read more
Property
Entry-level property is winning: How first home buyer programs are reshaping demand, pricing power and strategy
Lower-priced homes are appreciating faster as government support channels demand into the entry tier. For developers, lenders and marketers, this is not a blip—it’s a structural reweighting of demand ...Read more
Property
Multigenerational living is moving mainstream: how agents, developers and lenders can monetise the shift
Australia’s quiet housing revolution is no longer a niche lifestyle choice; it’s a structural shift in demand that will reward property businesses prepared to redesign product, pricing and ...Read more
Property
Prestige property, precision choice: a case study in selecting the right agent when millions are at stake
In Australia’s top-tier housing market, the wrong agent choice can quietly erase six figures from a sale. Privacy protocols, discreet buyer networks and data-savvy marketing have become the new ...Read more
Property
From ‘ugly’ to alpha: Turning outdated Australian homes into high‑yield assets
In a tight listings market, outdated properties aren’t dead weight—they’re mispriced optionality. Agencies and vendors that industrialise light‑touch refurbishment, behavioural marketing and ...Read more
Property
The 2026 Investor Playbook: Rental Tailwinds, City Divergence and the Tech-Led Operations Advantage
Rental income looks set to do the heavy lifting for investors in 2026, but not every capital city will move in lockstep. Industry veteran John McGrath tips a stronger rental year and a Melbourne ...Read more
Property
Prestige property, precision choice: Data, discretion and regulation now decide million‑dollar outcomes
In Australia’s prestige housing market, the selling agent is no longer a mere intermediary but a strategic supplier whose choices can shift outcomes by seven figures. The differentiators are no longer ...Read more
Property
The new battleground in housing: how first-home buyer policy is reshaping Australia’s entry-level market
Government-backed guarantees and stamp duty concessions have pushed fresh demand into the bottom of Australia’s price ladder, lifting values and compressing selling times in entry-level segmentsRead more
Property
Property 2026: Why measured moves will beat the market
In 2026, Australian property success will be won by investors who privilege resilience over velocity. The market is fragmenting by suburb and asset type, financing conditions remain tight, and ...Read more
Property
Entry-level property is winning: How first home buyer programs are reshaping demand, pricing power and strategy
Lower-priced homes are appreciating faster as government support channels demand into the entry tier. For developers, lenders and marketers, this is not a blip—it’s a structural reweighting of demand ...Read more
