Westpac has joined CommBank and NAB in backing a more optimistic outlook on interest rate rises and economic growth, and thus house price gains.

The forecast comes after the major bank predicted prices to track flat in 2023. At that point, the bank’s economists expected Sydney prices to lift just 1% this year - the only capital to record an increase.

Westpac’s revision for property prices is higher than those of its fellow major banks. 

In July, NAB forecast property prices would rise by 4.7% in 2023, not down 4% as previously expected.

Meanwhile, PropTrack’s Property Market Outlook Report predicts home prices will increase by up to 5% nationwide this year with Perth, Adelaide, and Sydney to lead the pack.

Westpac Senior Economist Matthew Hassan said the housing market has continued to “outperform expectations” and is on track for sustained price rises.

“Gains have been well sustained despite further rate hikes from the RBA in February, March, May, and June,” Mr Hassan said.

“The consistent picture from prices, turnover, auction activity, new finance approvals and sentiment is of a broadening recovery, albeit one that is being led by prices with the volume of activity and demand still relatively subdued.”

Westpac noted capital city prices had retracted much of the 9.7% fall over the previous 10 months.

2022 2023 forecast 2024 forecast 2025 forecast
Sydney -12% 10% 6% 4%
Melbourne -8% 4% 3% 2%
Brisbane -1% 6% 4% 3%
Perth 4% 8% 8% 6%
Australia -7% 7% 4% 4%

Source: Westpac Dwelling Price Forecasts

Migration inflows influencing upturn

Mr Hassan said the surprising rebound was mainly coming from high migration inflows.

“The impetus for gains looks to be mainly coming from a sharp acceleration in migration inflows and an associated tightening in rental markets, all against a backdrop of low levels of ‘on-market’ supply,” he said.

“The turnaround in price growth has been strongest for markets where population growth has seen the sharpest pick-up (Sydney and Melbourne) and much more muted in markets that have seen a less pronounced shift (Adelaide, Hobart and Darwin).”

Westpac had initially forecast net migration of 1.9% (350,000) in 2023.

However the latest ABS data suggests population growth will rise by approximately 2.4%, equivalent to an annual migration inflow of 450,000.

The investor ‘wildcard’

Mr Hassan said one of the key uncertainties surrounding the housing market is investor activity.

“Our consumer sentiment survey shows most Australians view residential property as a risky proposition – currently only 5% nominating it as the wisest place for savings,” he said.

“That suggests we are a long way from seeing an investor boom take hold.

“However, attitudes will undoubtedly shift as the interest rate environment becomes less threatening and rental returns and dwelling prices continue to rise. Investor activity will remain an area to watch closely as the upturn unfolds.”

According to the ABS, the number of loans secured for investment property purchases peaked at 21,663 in March last year. 

As of June 2023, the volume of new investment loans had fallen around 19.2% to 17,497.

Investment housing credit growth turned negative in June.

Property investment pundits attribute this to rising interest rates, legislative red tape, and the cost of debt-eroding rental yields is forcing some investors to bail out of the market.


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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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