The latest forecast from Domain predicts a rise of six per cent in house values across all capital cities, and 5 per cent for apartments in the next 12 months. The biggest price increases are expected in Sydney, followed by Melbourne. Domain’s chief of research and economics, Nicola Powell, says the turnaround in Melbourne is interesting because the market there has built up a lot of value over the past several years. Dr Powell says having more supply kept price growth there more subdued compared to other capital cities. Five years ago, housing in Brisbane, Adelaide and Perth was 35-45 per cent cheaper than in Melbourne, while now it is on par. She says this will bring demand back into Melbourne. She says another factor driving growth in both Sydney and Melbourne is the two interest rate cuts this year and an expectation of more to come. Dr Powell says a rate cutting cycle that increases people’s borrowing capacity generally shows up faster in the big capital cities. She says this is a very challenged market for first home buyers. But the expanded first home buyer incentives from the federal government will offer some relief, and looking in outer suburbs and at apartments in certain areas could also help people break into the property market.
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