Expert predicts more pain for homeowners with house prices to plunge by another $100K in 2023 – as Reserve Bank readies to hike interest rates again this week
- Property prices expected to fall by 11 per cent
- Prices could drop by more than $100,000
The prices of homes around Australia are expected to drop by an average of more than $100,000 this year.
National Australia Bank chief economist Alan Oster said Australia’s economy is struggling with only 0.7 per cent growth forecast for 2023.
‘Unemployment is going to go up a bit but not excessively. Property prices are down 6 per cent in 2022, they will go down another 11 per cent this year,’ he told the Herald Sun.
Mr Oster said the drop will come as a ‘slow burn’ with its full effects not felt until the end of this year.
An 11 per cent home value drop would see a $132,000 decrease in Sydney and $107,000 in Melbourne.
Brisbane property prices are expected to fall by 15.1 per cent – an average of $118,000.
Property values around Australia are expected to plummet by 11 per cent this year, with major cities expected to cop losses greater than $100,000 on average
ANZ has also predicted housing prices will fall by 11 per cent while Commonwealth Bank economist Gareth Aird believes there will be a 15 per cent drop ‘from peak to trough’.
‘The sharp increase in interest rates, which has flowed through to significantly higher mortgage rates, has weighed on both the willingness and ability to borrow,’ he said.
‘For context, the RBA’s 300 [basis points] of already delivered rate hikes has reduced borrowing capacity by roughly 25 per cent.’
ANZ has predicted house prices will then begin to rise by roughly five per cent in 2024.
Exacerbating the situation is the lack of housing available in Australia as the country prepares to welcome some 200,000 immigrants this year.
With another rate rise due on Tuesday, thousands of Aussies that trusted the advice of Reserve Bank Governor Philip Lowe after he said rates would stay low until 2024 are now feeling duped.
Hundreds of homeowners who bought homes at peak prices are now dealing with loans that are bigger than what their property is worth – known as negative equity.
Reserve Bank Governor Philip Lowe is facing harsh criticism ahead of another rate rise on Tuesday after predicting rates would stay low until 2024 (pictured, the RBA)
Renters are also bearing the brunt of continually climbing rates and face weekly increases of $100 as landlords struggle with soaring repayments.
Dr Lowe has apologised for his failed prediction but it’s of little comfort to the almost 600,000 Australians who bought property relying on predictions of continuing low interest rates.
The Reserve Bank Governor’s position is up for renewal in September.
He will face a government committee on February 17.
Federal Liberal National Party MP for Groom – regional Queensland – Garth Hamilton will sit on the committee and described Dr Lowe’s prediction as ‘extraordinary’.
Westpac senior economist Matthew Hassan believes the RBA should have raised rates in early 2021.
The bank is now predicting another three 0.25 rate rises this year and four drops of 0.25 per cent in 2024.
However, Mr Hassan is predicting only an eight per cent drop in property value in 2023.
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