PROPERTY prices are tipped to soar over the next decade as median house prices in most capital cities come with a $1 million plus price tag.
While it will music to the ears of current owners, for hopeful homebuyers it means they will be further squeezed out of a heated property market.
National house prices have skyrocketed at a rate of 8.43 per cent per annum in the 30 years until 2010 and given recent soaring growth rates it’s predicted Australians will need to stump up much larger deposits to afford properties that have risen beyond six digits.
Analysis by mortgage broking firm Home Loan Experts found the median house prices in all capitals is set to climb beyond $1 million and unsurprisingly Sydney will remain the most expensive city to buy — the average median house price in 2024 is tipped to hit $1.824 million.
Melbourne is the next worst where the median house price is tipped to reach $1.366 million.
Home Loan Expert’s managing director Otto Dargan is adamant property prices will continue to rise and said as a result homeowners would need to look at smaller properties including apartments.
“The days of the quarter acre block are coming to an end,’’ he said.
“Living in apartments will continue to become a much better trend.
“In the long term many Australian capitals with go the way of many international capitals, for example like London and New York, where most people rent for their entire life.”
Mr Dargan said household incomes had not kept pace with climbing house prices making house affordability even more difficult.
According to RP Data figures national house prices grew at a rate of 8.43 per cent from $37,500 in 1980 to $425,500 by 2010.
In Brisbane the median house price is set to reach $1.072 million in the next decade, Adelaide $1.038 million, Darwin $1.473 million, Perth $1.392 million and Canberra $1.295 million.
Hobart is the only capital that is not predicted to reach $1 million and will reach $740,000 by 2024.
RP Data’s senior research analyst Cameron Kusher believes Sydney house prices could push beyond the $1 million mark but said it would be difficult for the other capitals to do this with historic price rises unlikely to continue at the same pace.
AMP’s chief economist Shane Oliver said Australia has very expensive housing and wage growth had failed to keep up.
He said there would be continued house price growth in the coming decade but it’s likely to be at a slower pace.
“The ratio of house prices to household income is around six times in Australia whereas it’s about three times in the US,’’ Mr Oliver said.
“I think there will be years in there where there will be great runs but there will be years where they come off the eight per cent growth rate.”