Why Australian house prices could start to drop after soaring to record highs last year
- House prices set to drop as property market experiences an ‘inevitable’ plateau
- Economists predict subdued 2022 as lenders increase low fixed mortgage rates
- Experts have forecast moderation in price growth as more homes hit the market
Australians looking to break into the housing market can look forward to an ‘inevitable’ slowdown in prices, driven by easing buyer demand and an increase in homes for sale.
Australians looking to break into the property market this year can look forward to a drop in house prices as the country experiences an impending slowdown (pictured, a Sydney bidder)
Property values are estimated to climb at a much slower rate after a strong year of record growth (pictured, a Sydney property)
Gareth Aird, head of Australian economics at Commonwealth Bank told the Sydney Morning Herald it was ‘inevitable’ that house prices would eventually flatline.
‘It can’t keep growing at this sort of rate. It was inevitable that we were going to see a moderation in price growth and that’s what is happening right now,’ he said.
Mr Aird predicted prices would rise by seven per cent this year.
However he warns the Reserve Bank (RBA) could start lifting rates by November – which could lead to downward pressure on prices.
This could spark a market correction of 10 per cent in 2023, he warned.
In the year to November, Sydney’s median house price climbed by 30.4 per cent to a ridiculously unaffordable $1,360,543, CoreLogic data showed.
The estimated value of Australia’s residential real estate skyrocketed from $7.2trillion to $9.4trillion in the last year (pictured, homes in Sydney’s Neutral Bay)
The estimated value of Australia’s residential real estate skyrocketed from $7.2trillion to $9.4trillion in a year with one economist urging aspiring buyers to invest now.
CreditorWatch chief economist Harley Dale, who previously worked at the Housing Industry Association, said buyers who had passed stricter lending tests would be in a stronger position to find better value in 2022.
‘If you’re a buyer who feels as though you’ve got your financial plan in order, then I think most certainly it’s a better time to buy over the next six, 12, maybe 18 months,’ he previously told Daily Mail Australia.
The Commonwealth Bank is forecasting Sydney’s property price growth slowing from 27 per cent in 2021 to 6 per cent in 2022 before falling by 12 per cent in 2023.
The Commonwealth Bank is forecasting Sydney’s property price growth slowing from 27 per cent in 2021 to 6 per cent in 2022 before falling by 12 per cent in 2023 (pictured, homes in Sydney’s northwest)
Economist Harley Dale said there was no guarantee house prices would fall in 2023, as Australia dusted itself off after the Covid-19 lockdowns (pictured, an auction in Sydney)
It predicts Melbourne real estate values will go from a high of 17 per cent this year to 8 per cent next year, and fall by 10 per cent in 2023.
Westpac saw Sydney property prices rising by 27 per cent in 2021 before dramatically slowing to 6 per cent in 2022, followed by a 6 per cent drop in 2023.
It forecast Melbourne real estate values increasing by 18 per cent in 2021 before slowing to 8 per cent in 2022 and falling by 6 per cent in 2023.
However Dr Dale said there was no guarantee house prices would fall in 2023, as Australia dusted itself off after the Covid-19 lockdowns.
‘Lots of people have predicted double-digit falls in home prices in Australia for decades now and I think at the moment, it’s too early to tell if that will happen in 2023,’ the economist said.