Posted on September 22nd, 2023

Predicted House and Unit Prices in 2030 Australia: Insights for Investors

Predicting the future of any market, let alone the housing market, can be quite challenging. Despite that, many people are trying to anticipate what’s going to happen to Australia’s property markets over the next decade. With interest rates still relatively low, an increasing population pushing up demand for property, and data showing the housing market recovery is in full swing, it’s understandable why many are speculating that property prices will continue to rise in Australia.

With the right long-term approach to property investment, investors can take advantage of both rental yield and capital appreciation to create wealth for themselves. With this in mind, one of the biggest questions facing investors today is: what will property prices be like in 2030?

While predicting future property markets can be challenging, there are some key indicators that investors need to be aware of that could affect future property prices.

Is 2023 a good time to buy a house in Australia?

2023 is a good year to buy property in Australia, with property prices expected to increase significantly over the next seven years. The recent trend of Australia’s capital cities witnessing strong population growth is supporting property prices and increase demand for rental properties. Based on the latest statistics provided by the Australian Bureau of Statistics (ABS), Australia experienced a remarkable population increase of 563,205 people March 2022 to March 2023.

Source: Source: .id SAFi National to State tops-down forecast, 5.1.0, published May 2023

According to the ABS, Australia’s population is projected to steadily rise, reaching 28.3 – 29.3 million by 2027 and 37.4 – 49.2 million by 2066.

Australia’s robust population growth, fuelled by a resurgence in overseas migration, is exerting significant influence on the current property market conditions, creating heightened demand for housing and offering a promising landscape for investors seeking opportunities.

Predictions for Major Australian Cities in 2030

According to ABS data, the average residential dwelling price increased by $25,200 to reach $912,700 in the June quarter.

See below a comparison of the CoreLogic September 2023 median property price compared to the projected increases by 2030.

Melbourne

When it comes to the Australian property markets, Melbourne has consistently stood out as one of the top performers. Over the past two decades, median house prices have exhibited an impressive average annual growth rate of 6.0%, while units have seen growth at 4.4%. According to the CoreLogic Hedonic Index September 2023, Melbourne’s median house price stands at $925,374, with units averaging $603,642.

Assuming that this historical growth trend persists, experts are inclined to predict that Melbourne’s house prices could potentially soar to as high as $1.39 million by the year 2030.

Source: CoreLogic, Sept 1, 2023

Sydney

As per CoreLogic, the values of houses in Sydney have witnessed a remarkable growth over recent decades, reaching $1.36 million. Over the past two decades, houses have grown at an annual rate of 5.8%, and units at 3.8%.

Source: CoreLogic, Sept 1, 2023

For investors considering purchasing in Sydney, if this rate of growth were to continue at the same pace, Sydney house prices are expected to reach nearly $2.02 million by the end of the decade. This can be attributed to the city’s strong population growth, robust economy and major infrastructure projects, such as the $12.5 billion Sydney Metro City & Southwest project.

Brisbane

Investors should be pleased to note that CoreLogic data shows Brisbane house values have increased by 6.4% p.a. over the past 20 years, and units by 4.8%. Based on this trend, median house prices could rise to $1.284 million by 2030, and units to $730,000.

Brisbane’s strong population growth and substantial infrastructure spending is expected to underpin long-term property price growth. In the Queensland budget 2023-24 a record 4-year $89 billion capital program is rolling out, which will support around 58,000 jobs in 2023-24.

Source: CoreLogic, Sept 1, 2023

Perth

Perth has not missed out on the party either, with houses growing by 5.6% p.a. over the past 20 years, and units at 4.2%. If this growth continues, house values are set to hit $931,000 and units $575,000 by 2030.

With hundreds of millions of dollars of infrastructure spending planned, and the city’s population continuing to grow, the future is looking rosey for Perth property prices.

Source: CoreLogic, Sept 1, 2023

Examining Historical Trends and Patterns

As part of a successful property investment strategy, it’s important to consider the long-term trends in housing prices. This analysis should take into account factors such as population growth, infrastructure spending, economic conditions and other related variables.

Historically, Australia has seen periods of high property price growth followed by periods of consolidation or even decline. For example, house prices in Sydney rose rapidly between 1998 and 2003, only to stabilise for the next 6 years. In 2017, they rose again, driven by strong population growth and improved economic conditions. It is important to understand that markets can performs in different ways over time, but the crucial thing to recognise is that “time in the market” (long term investing) has a big influence on the success of any investor.

Factors Influencing House Prices in 2030

Immigration Boom

One significant driver of housing demand and, subsequently, property prices is population growth, largely driven by immigration. Australia has always been a prime destination for international migrants. According to the National budget 2023-24, Net overseas migration, is a significant component of population growth and is projected to reach 316,000 by 2023-24. And the trend of high levels of immigration to Australia is expected to continue well into the 2030s. High numbers of new arrivals into the country significantly pushes up the demand for housing, putting upward pressure on property prices. This is particularly true in capital cities, which are often the first port of call for new arrivals.
Infrastructure Spending

Infrastructure spending is another key factor that can affect property prices by improving or creating access to new services and amenities. In particular, transport infrastructure – such as light rail, train lines, public transit networks, etc – can significantly improve convenience for residents of a given area. This could also lead to an influx of people into the area, increasing demand for housing and therefore property prices.

The Australian government’s rolling $120 billion 10-year infrastructure plan shows that it is committed to investing in infrastructure for the foreseeable future. Therefore, it’s worth considering potential future developments in the area when selecting a property to invest in.
First Home Buyers

First home buyers make up an important part of the Australian property market and their activity can help to trigger a wave of property market transactions, and growth. The combination of historically low-interest rates, government incentives, and the desire for more spacious living arrangements, particularly in the wake of the COVID-19 pandemic, has led to a surge in first home buyer activity. Going forward, the availability of these incentives and the broader economic environment will play a critical role in determining the level of first home buyer activity and its impact on property prices in 2030.
Affordability

Affordability is another critical factor influencing property price growth. More affordable areas can attract a greater level of demand, especially from new migrants. Over time this level of increased demand can lead to substantial growth in prices, and can quickly result in these locations becoming unaffordable for many – but resulting in strong growth for “early adopters” in these locations.

Outlook

Predicting future house prices in Australia in 2030 is always a challenging endeavour, as it involves numerous complex factors and uncertainties. However, based on research and current trends, here are some key insights for potential investors:

Overall Positive Outlook: Australia’s property market is expected to perform well in the coming years. Several factors contribute to this optimism, including historically low-interest rates, population growth, and infrastructure development.
Location Matters: As always, location is a critical factor in real estate investment. The outer suburbs of major cities like Melbourne and Sydney, are undergoing significant development and infrastructure projects, and as a result are expected to benefit from strong demand which in turn is expected to lead to price growth. Additionally, the 2032 Olympic Games in South-East Queensland will have a positive impact in the region.
City-Specific Predictions:

Melbourne: Historical trends suggest that Melbourne’s property market has consistently performed well. If this trend continues, house prices in Melbourne could potentially reach $1.39 million by 2030.
Sydney: Strong population growth and infrastructure projects are expected to support continued property price growth in Sydney, with predictions of house prices nearing $2.02 million by the end of the decade.
Brisbane: Brisbane has shown robust growth in property values, and ongoing population growth and substantial infrastructure spending, including the 2032 Olympic Games, could drive median house prices to $1.28 million by 2030.
Perth: Perth is currently seen by many as Australia’s hottest investment opportunity. With a robust economy, a serious undersupply of new property and the nation’s most affordable capital city house and unit prices, it is easy to see why this market is primed for growth, with house prices expected to reach $930,000 by 2030.

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