NSW has been hit hard by the economic downturn, and its housing market has been one of the most undervalued in the country, but it is still expected to see prices increase by $1.9bn in the 2018-19 financial year, according to a report by the Australian Real Estate Institute (ARISE).
The average home price in NSW will increase by 10.5 per cent in 2018-2019, compared to an average home sale price of $1,000 in 2019-2020.
The average sale price will increase to $1m in 2019, but that will rise to $2m by 2023.
“The economic downturn has hit a lot of people hard and we’re still seeing lots of house prices rise and lots of people losing their homes,” said Ritchie Henson, ARISE chief executive.
“It’s really going to impact the affordability of housing and the way people can buy a home.”
It is not yet clear if the impact will be as bad as it was in 2018.
ARISE said it expects house prices to increase by about 7 per cent across the state in 2019 and 2020, which is the same pace as in 2017.
“This is a very healthy year, which we’re going to see more people moving into the market and we expect to see a very good year from this,” Mr Henson said.
“There’s still a long way to go before we see a huge change but we’re very confident.”
The median house price in the NSW capital, Newcastle, is now $1 million, which represents about a third of the median house prices in Sydney, according the ARISE.
Sydney’s median house sale price is now about $1million, which puts it second only to Melbourne.
“We have some really good properties coming on stream in Newcastle and we know they are going to be priced out by a lot more,” Mr Giesbrecht said.
Sydney is still the biggest housing market in the nation and the average sale prices for those properties are still well above the average house price.
Property values across the capital have increased by around $2,000 per home in the last four years, which has contributed to the housing market being overvalued.
Sydney and Melbourne were ranked third and fourth, respectively, in the best and worst cities for house prices.
“If we are going by the average of all properties that are listed for sale in the state, it is really a little bit low in Newcastle, it’s a little low in Sydney and it’s definitely not the best city to be in,” Mr Brierley said.