How Far Are House Prices Going To Drop? | Property Investing

According to CBA house prices in Sydney and Melbourne are expected to fall over the next 6 to 12 months.

The reason house prices are expected to fall is due to sentiment (the way people feel about the property market) and interest rates (according to Core Logic there is little to no correlation between raising interest rates and property price declines).

The Australian government provided huge fiscal stimulus in 2020 and 2021 which resulted in lavish spending, extremely low unemployment rates and the inflation of assets like property.

This is why the Reserve Bank of Australia is now raising interest rates and why house prices in some of Australia’s more overvalued property markets are declining.

A very similar pattern occurred in late 2017 when the Australian government made it difficult for banks to lend money. At the time house prices in Sydney and Melbourne declined temporarily by between 10 and 15% and then rebounded once confidence and demand came back to the market.

I think this period will be short-lived and once the Reserve Bank begins to cut interest rates again (the Reserve Bank is publically stating it will begin to cut rates again by the middle of 2023) the average Australian will be rushing back into the property market.

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Ben founded Pumped On Property after building a multi-million dollar property portfolio over a 5 year period. His mission is to show you how to replace your income through property investing so you can do what you love…full time.

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