Adelaide, Brisbane and Perth house prices are expected to recover as Sydney and Melbourne drop
Home prices are expected to rebound within a year in Australia’s smaller capital as Sydney and Melbourne’s values plunged into double digits.
The Reserve Bank of Australia is widely expected to continue raising interest rates in 2022 and early 2023 to tackle worst inflation in two decades, with more pain expected in August.
Simon Pressley, founder and managing director of buyer agency Propertyology, said this would likely cause home prices in Sydney and Melbourne to fall by as much as 15 per cent by the middle of next year.
‘The days of high tide that lift all ships are sure to end,’ he said.
‘Weaker fundamentals in Sydney and Melbourne could potentially result in a 10 to 15 per cent drop in house prices from January 2022 to June 2023.’
Mr Pressley said the 2022 downturn in Australia’s two largest cities had echoes of 2017, when banking regulators tightened rules on interest-only and investor-only lending.
This time around, Sydney and Melbourne are more vulnerable as falling immigration results in more housing supply in cities with more mortgage stress.
“Sydney and Melbourne are once again on the unwanted front line,” Pressley said.
‘The main macro effects this time around are rising interest rates and inflation.’
Home prices are expected to rebound within a year in Australia’s smaller capital as Sydney and Melbourne’s values slump to double digits (pictured is the house with a pool in the Brisbane suburb of Hendra)
Sydney’s median house price of $1,382 million in June was not far from the $1,375 million level in December, with a fourth straight month of declines opening up gains in early 2022, CoreLogic data shows.
A 15 percent drop in mid-2023 would see prices drop $206,245 back to $1.169 million over 18 months.
Melbourne’s median house price in June was $975,850, a level slightly below the $997,928 level in December.
A 15 percent decline over the 18 months to mid-2023 would subtract $149,689 from the midpoint value, bringing it back to $848,239.
Mr Pressley, however, is optimistic about smaller capitals, expecting prices in Adelaide, Brisbane and Perth to ‘return to normal growth rates over the next 12 months’.
‘Some key metrics for most other parts of Australia are significantly better than Australia’s two most populous cities,’ he said.
Mr Pressley forecast a rise of 4 to 10 percent during the early recovery phase in the smaller capital.
A 10 percent increase in median June house prices in Brisbane would see the value rise $89,213 from $892,133 to $981,346.
Commonwealth Bank expects home prices in Brisbane to rise 6 percent in 2022 before falling 10 percent next year.
Brisbane was flat last month but prices have grown at an annual pace of 27.4 percent.
If Propertology’s forecast for Adelaide materializes, median house prices will rise $69,925 from $699,251 to $769,176.
Simon Pressley, founder and managing director of buyer’s agency Propertyology, said rising interest rates would likely cause home prices in Sydney and Melbourne to fall by as much as 15 percent by the middle of next year (pictured is Sydney Harbor Bridge)
Melbourne’s median house price in June was $975,850, a level slightly below the $997,928 level in December. A 15 percent decline over the 18 months to mid-2023 would subtract $149,689 from the midpoint value, bringing it back to $848,239 (pictured is pedestrians in Melbourne in 2020)
The CBA, by contrast, expects Adelaide house prices to rise 6 percent in 2022 and fall 11 percent in 2023.
Adelaide home prices rose by 1.3 percent in June and by 27.4 percent over the year, making it Australia’s strongest performing capital market.
According to Propertology’s estimates, house prices in Perth could jump $58,511 from $585,114 to $643,625.
For Perth, the Commonwealth Bank expects a 2 percent increase in 2022, followed by a 9 percent decline in 2023.
Mr Pressley said regional markets will likely continue to do better than capital cities.
“As it happens every year, the best-performing property market will again be among Australia’s 200 substance territories, as opposed to the eight capital cities,” he said.
‘Hourly bullshit on people’s devices referring to “national decline” is an affront to human intelligence.’
The Commonwealth Bank expects the Reserve Bank’s interest rate to peak at 2.1 percent in November.
But Westpac and ANZ expect a cash rate of 2.6 percent at the start of next year.
Major banks expect the RBA to raise interest rates by 0.5 percentage points in August, bringing it to a six-year high of 1.85 percent from a three-year high of 1.35 percent.
If Propertology’s forecast materializes, Adelaide’s median home price will rise $69,925 from $699,251 to $769,176 (pictured is the more luxurious house in Glenelg)
This will follow the release of June quarter inflation data on July 27.
ANZ forecast a 6.3 percent pace, which would be the highest since 1990.
The 1.25 percentage point rise in the cash rate in May, June and July has been the steepest for three straight months since 1994.
But Mr Pressley said investors tended to buy property in smaller capital cities and regional areas, favoring a faster recovery outside Sydney and Melbourne.
“The fearful behavior of uninformed decision makers will result in a significant reduction in buyer activity, paving the way for calm investors to pounce in locations with far superior fundamentals to Sydney and Melbourne,” he said.
#Adelaide #Brisbane #Perth #house #prices #expected #recover #Sydney #Melbourne #drop
Comments
Post a Comment