A recent report by the Australian Financial Review forecasts a continued upward trend in house prices in major Australian cities over the next three years. It is expected that, driven by multiple factors, prices in cities such as Sydney, Melbourne, and Perth will continue to rise, with the unit market outperforming detached houses.

Firstly, one of the main driving factors behind the rise in house prices is the anticipation of interest rate cuts. Market expectations of future interest rate cuts have boosted buyer confidence, creating favorable conditions for price increases. Particularly in the Sydney market, significant improvements are expected to result in a decrease in the proportion of income needed by buyers to pay mortgage loans.

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Secondly, inadequate housing supply is also an important factor driving the rise in house prices. With the increasing number of overseas net migrants and the participation of foreign buyers, downsizers, and cash buyers in the market, there continues to be a shortage of housing supply. Although higher interest rates weaken buying power, the imbalance between supply and demand continues to increase upward pressure on prices.

Additionally, population growth is also a significant driver supporting the rise in house prices. Particularly in the Perth market, driven by strong economic growth and population increases, prices are expected to accumulate a 30% increase over the next few years, making it one of the leading markets in national price growth. The Darwin market is also expected to be the second strongest market, influenced by government spending, especially in defense.

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Furthermore, the unit market is also receiving attention. It is expected that over the next three years, the performance of the unit market will outperform detached houses, and prices of units in major cities will rise. This forecast is closely related to factors such as soft completion rates of apartments and affordability pressures.

However, despite the evident upward trend in house prices, there are also some risks and challenges. For example, there are conservative risks in price forecasts for the Perth market, as the market tends to have significant upward and downward trends in price cycles, requiring cautious handling. Additionally, factors such as national population movements and policy changes may also influence price trends nationwide.