Bearish outlook on housing as prices tipped to dip 14% over 2023-2024
- Last year saw 22% growth with Australia’s national house prices which are set to rise just 2% in 2022.
- Prices could fall 14% over 2023-2024 as strong inflation forces the RBA to start lifting interest rates from August.
- Headline inflation was 3.5% in the year to December 31, while underlying inflation was 2.6%.
Economists from major banks have a bearish outlook on Australia’s housing market, tipping prices could fall as much as 14% during 2023 and 2024.
Strong inflation is forcing the Reserve Bank of Australia (RBA) to begin lifting interest rates, possibly from August, which has Westpac forecasting property prices to decline 14%.
Earlier this year, the National Australia Bank (NAB) tipped prices would fall by 11% in major cities Sydney and Melbourne in 2023, with AMP Capital predicting a fall of up to 10% during the same period.
In 2021, prices grew some 22% as the country enjoyed a record low cash rate. This year, house prices are expected to rise about 2% as early gains are offset towards the end of the year.
The chief economists of AMP, Commonwealth Bank of Australia, Deutsche Bank, and Westpac are predicting the RBA to increase prices from August.
However, some market analysts believe that the ongoing supply chain issues, increased unemployment, and inflationary pressures mean interest rates were unlikely to start climbing anytime soon.
As previously reported by Grafa, prospective home buyers have already been squeezed further out of the market as a lending clampdown on borrowing capacity is leaving many with little savings unable to get their foot into the home ownership door.
As property prices soared more than 20% last year, RBA has been quick to warn of the need for borrowers to have adequate buffers, as reported by Grafa.
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