CBA Economists, Luke Yeaman and Lucinda Jerogin, today published insights into Australian home prices – below is an overview of their latest views.
Key Takeaways
Prices rising, but not booming
Home prices are climbing faster than expected this year, helped by interest rate cuts, stronger household incomes and limited housing supply. CBA economists now expect prices to rise 6 per cent in 2025 (up from 4 per cent) and 4 per cent in 2026 (down from 5 percent).
“The housing market is picking up thanks to rate cuts, but there are headwinds, so we’re not expecting as big a lift as we’ve seen in the past,” CBA Chief Economist Luke Yeaman said.
“Even though incomes are improving, a shallow rate cutting cycle, slower migration and stretched housing affordability means prices probably won’t rise as much over the next year.”
Smaller cities outperforming
Brisbane, Perth and Adelaide are expected to see the strongest growth this year, with prices forecast to rise 8 per cent, 7 per cent and 6 per cent respectively. The Sydney and Melbourne markets are typically more sensitive to interest rate cuts and will also gain ground.
Affordability still a challenge
Mortgage repayments now take up around half of the average household’s income. While incomes are rising and borrowing costs are easing, there is little cause for celebration. Housing affordability will improve a little, but housing will remain expensive compared to historical levels.
Supply catching up slowly
Population growth is slowing and construction activity is starting to recover, which should help to better balance supply and demand by the end of 2026. But labour shortages, high building costs and slow planning approvals are still holding back new housing.
See here to read the full analysis.
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