Up 11pc: Big bank’s surprise forecast for Aussie home prices

One of the big four banks is tipping a near 11 per cent rise in home prices by the end of 2026. Picture: Jake Nowakowski.

One of the big four banks has upgraded its forecast for Aussie home prices, tipping capital city values to rise even higher next year as interest rate cuts boost borrowing power.

ANZ Research now expects capital city prices to rise 5 per cent by the end of this year and a further 5.8 per cent — culminating in a near 11 per cent jump in by the end of 2026.

ANZ economist Madeline Dunk said momentum had been building since the Reserve Bank cut interest rates in February, with capital city home prices growing at an annualised rate of 7.4 per cent over the past three months.

ANZ has upgraded its forecast for home price growth across Australia’s capital cities. Photo: Lisa Maree Williams.

RELATED: Named: Every bank that’s slashed rates to under 5pc

The bank expected the RBA to cut rates by another 25 basis in August, and predicts another 0.25 per cent decrease in November, which should support prices further — particularly in Sydney and Melbourne.

The research found Australia has a higher share of households on variable rate mortgages relative to other economies, and that around 10 per cent of households have lowered their mortgage repayments since the RBA began easing rates in February.

Auction clearance rates have also been trending upwards, according to ANZ, averaging 68 per cent over the past month.

RBA Governor Michele Bullock. Photo: Gaye Gerard.

MORE: Double rate cut expected as more banks drop into 4pc range

Lack of supply remains a major factor supporting projected home price growth.

Across the capital cities, new listings were down 12 per cent in July and total listings were down 8 per cent.

“Stock is particularly constrained in Hobart, with new listings down 25 per cent year-on-year and total listings down 29 per cent in July,” Ms Dunk said.

“We think some of the recent strength in housing prices is due to the lack of stock on the market.

According to ANZ, new listings across Australia’s capital cities are down more than 10 per cent year-on-year and total listings are about 29 per cent below the 10-year average. Picture: Kelly Barnes.

“New listings (nationally) are down more than 10 per cent year-on-year and total listings are about 29 per cent below the 10-year average.

“Listings should rise as the spring selling season gets underway. Medium term, housing undersupply will continue to place pressure on prices, particularly in areas where population growth is strong.”

But the ANZ Research team also believes affordability constraints will prevent a sharp upswing in price growth.

“Cheaper properties are recording stronger price growth, with those in the bottom price quartile up 5.7 per cent year-on-year in July versus 1.2 per cent year-on-year for those in the top quartile,” Ms Dunk said.

MORE: Shock as Aus big bank increases interest rates

“We expect Melbourne to experience an affordability-driven boost in 2026, while Adelaide may struggle given the 76 per cent rise in prices over the past five years.

“We expect the pace of growth to slow in the smaller capitals, like Perth and Adelaide.”

It comes after KPMG announced it expects house prices across the country to rise by 4.5 per cent in 2026 — up from its previous forecast of 3.3 per cent.

“You can really feel a renewed confidence in the market over the last few months in particular, with the quarterly growth rate hitting the highest level since this time last year,” KPMG chief economist Brendan Rynne said.

“Two interest rate cuts so far this year, and a likely succession of further cuts on the way are helping to kick start the property market for the first time since the pandemic, putting more pressure on prices,” Dr Rynne said.

The post Up 11pc: Big bank’s surprise forecast for Aussie home prices appeared first on realestate.com.au.