Mortgage holders could be in for a bumpy ride in the next 18 months with prices predicted to drop by more than $200,000 in Sydney alone by the end of next year.
According to RateCity analysis of ANZ’s new property price forecasts, the national media house price could fall by $150,518 by the end of 2023.
Sydney prices could take the biggest hit, with predictions of a $204,543 drop, bringing the median price for a home down to $1,141,650. In Melbourne, prices are predicted to fall by $128,141, while in Brisbane, the expectation is a $164,667 fall, bringing the median price down to $719,669.
Adelaide is predicted to experience the deepest percentage cut next year, down -17 percent to $539,452.
But before homeowners start liquidating assets, ANZ is predicting calmer seas for 2024, with price rises across all capitals.
For those already in the market, the biggest impact could be on those looking to refinance. RateCity points out that those without at least 20 percent equity in their homes will be unable to refinance, relegating them to ‘mortgage prison’. Those who took advantage of the Federal Government’s low deposit scheme are considered to be the most at risk.
Following the devastation of recent flooding, experts are urging government intervention to drive the cessation of building in areas at risk.
RMIT expert says a conflation of factors is making the property market hard than ever to predict
A leading property academic has described navigating the current Australian housing market ‘like steering a ship through a thick fog while trying to avoid obstacles’.
Lecturer in RMIT’s School of Property Construction and Project Management Dr Woon-Weng Wong said the combination of consecutive interest rate rises aimed at combating high inflation, higher property prices during the pandemic and cost of living pressures such as the end of the fuel excise that occurred this week made it increasingly difficult for those looking to enter or upgrade to find the right path.
“Property prices grew by approximately 25 percent over the pandemic so it’s unsurprising that much of that growth ultimately proved unsustainable and the market is now correcting itself,” Dr Wong says. “Despite the recent softening, the market is still significantly above its long-term trend and there are substantial headwinds in the coming months. Headline inflation is still red hot, and the central bank won’t back down until it reins in these spiralling prices.”
This should be enough to give anyone considering entering the market pause, he says.
“While falling house prices may seem like an ideal situation for those looking to buy, once the high interest rates, taxes and other expenses are considered, the true costs of owning the property are much higher,” Dr Wong says.
“People also must consider time lags in the rate hikes, which many are yet to feel to brunt of. It can take anywhere from 6 to 24 months before an initial change in interest rates eventually flows on to the rest of the economy, so current mortgage holders and prospective home buyers need to take this into account.”