PHOTO: Property prices have soared as interest rates have fallen. Photo: Supplied
How high can house prices rise?
The median house in Sydney will now set you back almost $1.5 million, and for that budget, don’t expect to live very close to the CBD. In Melbourne, it’s nearly $1.04 million, and in Canberra, $1.07 million, the latest Domain House Price Report for the September quarter found. The capital city average is nudging $1 million.
The frenzied bidding seen in autumn is largely over, but don’t expect to get a bargain – property prices look set to edge even higher from here.
The pace of growth is key. Early this year prices were rising at a super-fast pace as buyers took advantage of interest rate cuts to borrow more money and buy their first home or a bigger family home. The huge budgets in play at auctions sent prices soaring and left underbidders shocked.
Interest rates can’t go much lower, so don’t expect another similar boost to borrowing power. Indeed, the bank regulator recently trimmed the maximum amount buyers can borrow, although it’s a slight change that only affects the small number of people who borrow to the limit.
But with more buyers than sellers, expect prices to keep going up for now, just not at the same breakneck pace and not for every home.
That is, we’ve probably passed peak price growth, but we’re not yet at peak prices.
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