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

By Devayani Sathyan

BENGALURU (Reuters) -Australia’s home prices will rise around 5-6% over the next two years as lower borrowing costs provide a fillip to home sales, although affordability pressures may cap gains, according to a Reuters poll of property analysts.

While a 5% rise pales in comparison with past booms, any sustained growth in house prices will make it harder for first-time buyers to get a foothold in Australia’s already expensive housing market – the median home price is nearly eight times the average annual income.

The Reserve Bank of Australia’s 75-basis point cuts since February have trimmed mortgage repayments and supported modest buyer activity. But, with rates expected to bottom out at 3.1% early next year, from 3.6% now, and supply constraints persisting amid alrea