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‘Nonsensical’: Economist shuts down 10% price drop talk
A big four bank’s suggestion that Australia would see a 10 per cent dip in property prices over 2023 has been promptly shut down by an economist.
Earlier this week, the Commonwealth Bank revealed itself as now the most negative among the major banks with respect to future house prices.
It’s now forecasting price falls of 12 per cent in Sydney and Hobart and 10 per cent in Melbourne and Canberra in 2023.
It also expects a 9 per cent drop in Perth prices and anticipates 8 per cent falls across Brisbane, Adelaide, and Darwin.
Bluestone Home Loans consultant economist, Dr Andrew Wilson, has rubbished the claims, which are based on a sharp increase to interest rates, as “nonsensical”.
While acknowledging that the market will soften in 2022 – due to rising affordability barriers and lower demand – he argued price growth would remain.
He also reiterated that the RBA itself had outlined expectations for the cash rate to remain at the current level until 2024, based on the central bank’s wage rise requirements and inflation targeting.
“For wages growth to meet the RBA requirements for a rate rise by November 2022 – the date predicted by those forecasting record price falls in 2023 – would require an unprecedented surge in incomes over coming months,” he said.
Even so, he noted that “since 1987, Australia’s capital city housing market has experienced only three years where home prices have fallen – 2008, 2011 and 2018. And the price declines were clearly modest, falling by just 4.0 per cent, 4.1 per cent and 5.1 per cent, respectively”.
Another factor dampening Dr Wilson’s expectations for property price falls is the expectation of a quick return to high migration levels – set to “again place upward pressure on home prices in our still undersupplied housing markets”.
