“Historically, there is a bit of a lag between the changes in the cash rate by the RBA and the impact that has on real estate prices; this time around, we won’t see that lag, the reason being that the moment the RBA raises rates, the momentum [in the property market] will have already declined significantly, ”he said.
ANZ Senior Economist Felicity Emmett said affordability constraints and the increasing supply of homes for sale – with record auction volumes and a significant increase in real estate listings at the end of 2021 – were the main factors currently causing the moderation in price growth. However, the impact of rising fixed mortgage rates and tighter lending standards would be felt throughout the year as home hunters faced reduced borrowing power.
She predicts that property prices in the capital will rise another 6% this year, with larger gains expected in the first half of the year and growth flattening out by the December quarter, before turning negative at the start. next year. A 4% drop was anticipated for 2023, when it expects the cash rate to rise in the first half of the year – still ahead of the 2024 timeline forecast by the Reserve Bank.
“The forecast we have is a very modest drop in the context of the gains we have seen over the past year,” Ms. Emmet said.
However, there was a risk that the market would slow down and fall more quickly than expected, she added, with lower auction close-out rates and daily price data suggesting a “fairly significant” slowdown in prices for auctioneers. housing by the end of 2021.
While reopening the borders and returning expats and newcomers would add to the demand for housing, that would not be enough to change the housing market slowdown, she said, noting that interest rates would be again a more important price driver.
Westpac senior economist Matthew Hassan said house prices would be sensitive to loan limits and interest rate changes, which he expected to see as early as February 2023.
“[Lending limits] in combination with this growing expectation of a rate hike – and not just one but a cycle of rate hikes in the years to come – will flatten the market in the second half of this year. [this] year, ”he said.
Westpac predicted that the capital’s prices would rise another 8% this year, with a 5% correction expected in 2023. However, Hassan noted that the housing market was becoming more varied, with a more significant slowdown in the economy. Price growth already underway in Melbourne, while Brisbane and Adelaide have further accelerated.
Eliza Owen, head of residential research for CoreLogic in Australia, said price growth was still held in small capitals, with Adelaide and Brisbane continuing to achieve record growth rates late last year, while that larger markets like Sydney and Melbourne have seen a slowdown. .
“[It] comes down to a difference in the dynamics of supply, and it comes down to the story of affordability, ”she said.
However, Ms Owen noted that there could be a more widespread slowdown as mortgage rates rise, inventory levels normalize, and affordability issues spill over into low-priced markets.
She did not make a prediction for house prices this year, but noted that the consensus was that growth would be much lower than the 22% seen in 2021 – banking economists expecting growth to grow. a number.