Aussie home prices to rise on interest rate cuts, affordability worries persist- Reuters poll

Core Viewpoint - Australia's home prices are projected to rise by approximately 5-6% over the next two years due to lower borrowing costs, although affordability issues may limit these gains [1][4]. Group 1: Home Price Forecasts - Analysts predict a 5% increase in home prices for this year, revised up from previous forecasts of 4% and 3.7% in earlier quarters [4]. - Home prices in major capital cities such as Sydney, Melbourne, Adelaide, Brisbane, and Perth are expected to rise between 4% and 7% this year and next [6]. Group 2: Impact of Interest Rates - The Reserve Bank of Australia's 75-basis point cuts since February have reduced mortgage repayments, supporting modest buyer activity [3]. - Rates are expected to bottom out at 3.1% early next year, down from the current 3.6% [3]. Group 3: Affordability Concerns - The national median home value increased by around 4%, from A$814,293 in January to A$848,858 in August, indicating high historical standards [7]. - Analysts are divided on purchasing affordability over the next 12 months, with some expecting modest improvements while others predict a worsening situation [8]. Group 4: Market Dynamics - Lower borrowing costs are anticipated to enhance household buying capacity, exerting upward pressure on the housing market [5]. - However, the chronic undersupply in the housing market raises concerns that increased demand could further exacerbate affordability issues [9].