Will house prices return to their 2022 peak?

Looks like real estate prices are going up again so when can we expect them to be back to their 2022 peak?

We’re now consistently seeing house price growth across every Australian capital city. Like every downturn, we’ve seen prices fall far less than what’s generally predicted. Housing markets almost always surprise with strength on the upside and see far less robust declines when the market turns. It’s certainly the case this cycle with peak to trough decline of Australian capital city house prices of 6.5 per cent, compared to COVID-driven price growth of 36 per cent.

Leading the way are the cities that saw the biggest falls last year. Sydney’s prices fell by 11.8 per cent last year but have increased 4.1 per cent since December.

House prices have now been rising for three consecutive months, suggesting that this is more than just a one-off change in market conditions. Given the complexity of property markets, the increase is not unexpected.

Rents are now rising at their fastest pace ever recorded, driven by an imbalance in supply and demand. This imbalance is now flowing through to house prices.

There’s a shortage of properties for sale, as well as a shortage of new homes being built. At the same time, population growth is back to pre-pandemic levels. It may be more expensive and difficult to get finance but this is being offset by not enough homes.

If prices continue to rise at their current levels, when can we expect them to be back to their 2022 peak? Assuming that the rate of price growth continues as it has over the past three months, median house prices could be back to where they were at the peak of 2022 in September 2023.

These dates could change however. We’re now likely at the peak of interest rates and if they start to come down this year, this will accelerate price growth. More negatively, if unemployment starts to rise, this could slow the pace of change.

Some notable sales over the past week to demonstrate these points:

• 162 Parkes St, Helensburgh $1,145,000
• 761 Lawrence Hargrave Dr, Coledale $2,730,000
• 7A Old Coast Rd, Stanwell Park $2,400,000
• 3 Hillside Cres, Stanwell Park $2,400,000
• 28 Austinmer St, Austinmer $3,025,000

About the author

Ian Pepper has had a long and distinguished career as a finance and real estate professional. Originally trained as a Chartered Accountant in 1995, Ian worked in Sydney and London. He has an MBA from Macquarie Graduate School of Management and now sells real estate with Ray White Helensburgh. Ian also volunteers with local community groups including school P&Cs, sporting clubs and business chambers.

Ian advertises in the Illawarra Flame, follow him on Facebook and Instagram