Property prices could be about to climb higher with new analysis predicting the major capital cities will see significant growth in the next three years.

According to the latest forecast by Oxford Economics Australia, Sydney’s median home is predicted to hit $2 million in the next three years. Meanwhile, Perth is expected to see house prices reach the $1 million mark. Median house prices across Melbourne, Brisbane and Canberra are anticipated to hit $1.2 million, while Adelaide will rocket to just under $1 million.

Hobart is predicted to increase to $855,700, Darwin to $695,600 while, and the national median house price may reach $1.34 million. In the first quarter of the year, Sydney’s median dwelling price had already hit $1.1 million, while Melbourne’s surpassed $779,000, with Perth in third at $704,000.

In the most recent data, Sydney’s median house price reached $1.4 million, with Melbourne’s rising to $935,049 and Perth’s jumping to $735,276. Adelaide’s median house price currently sits at $734,000, while Brisbane’s is at $818,000. Meanwhile, Canberra’s median house price is $839,000, Darwin’s is $498,000 and Hobart’s is $649,000.

Oxford Economics Senior Economist, Maree Kilroy said the unprecedented increase in population numbers, led by mass immigration, is a catalyst for the uptick in prices. “The Australian housing market was caught between two opposing forces in 2023 – higher interest rates and a fundamental undersupply of dwellings. The weight of demand eventually won out,” Ms Kilroy said.

“You have a fundamentally undersupplied market and with net overseas migration running at half a million people, a growing participation by foreign buyers, downsizers and cash buyers, demand has outweighed that drag that interest rates would typically have…

Expectations of rate cuts later this year have also propped up buyer confidence in early 2024.”

She said immigration numbers are driving the Perth market. “Population growth is running above 3 per cent per annum, with migration flows both interstate and overseas being pulled to Perth by a strong labour market and relatively good housing affordability, setting a solid base for continued double-digit price growth near term,” she said.

“Melbourne follows with a 21 per cent cumulative growth over the next three years, outperforming Sydney’s 18 per cent expected growth, fuelled by the resurgence in migration inflows, which will boost housing demand.”