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.
Follow Us Online Here:
DISCLAIMER No Legal, Financial & Taxation Advice
The Listener, Reader or Viewer acknowledges and agrees that:
• Any information provided by us is provided as general information and for general information purposes only; • We have not taken the Listener, Reader or Viewers personal and financial circumstances into account when providing information; • We must not and have not provided legal, financial or taxation advice to the Listener, Reader or Viewer; • The information provided must be verified by the Listener, Reader or Viewer prior to the Listener, Reader or Viewer acting or relying on the information by an independent professional advisor including a legal, financial, taxation advisor and the Listener, Reader or Viewers accountant; • We do not hold an Australian Financial Services Licence as defined by section 9 of the Corporations Act 2001 (Cth) and we are not authorised to provide financial services to the Listener, Reader or Viewer, and we have not provided financial services to the Listener, Reader or Viewer.