Commonwealth Bank of Australia (ASX:CBA) said that its economists expect home prices in Australia to rise 6% within the year and 4% in 2026, boosted by easing in policy rates, stronger household incomes, and limited housing supply, according to a Wednesday statement.
The forecasts are conditional on the Reserve Bank of Australia delivering two further 25-basis-point rate cuts in August and November. The economists had previously forecast a 4% increase in home prices in 2025 and a 5% increase in 2026.
House prices in Brisbane, Perth, and Adelaide are forecast to rise 8%, 7%, and 6%, respectively. The prices in Sydney and Melbourne are also expected to rise at a rate of 5% each.
Mortgage repayments now take up around half of the average household's income. Population growth is slowing, and construction activity is picking up, which should help to better balance supply and demand by the end of 2026.
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