What $700k can get you across Australia’s capital cities
On a budget? Take a look around the country and find out what kinds of property can be purchased in the sub-$700,000 ra...
Property prices are set to fall by up to 5 per cent by the year’s end, with further falls of up to 10 per cent likely by December 2023, according to new analysis.
The forecast comes from the PropTrack Property Market Outlook July 2022 report — a biannual analysis of the residential property market, which also comes with an outlook for the year ahead.
According to Cameron Kusher, the director of economic research at PropTrack and the report’s author, the expectation for the property price drops over the next six to 18 months is off the back of sooner-than-expected rate hikes — and expectations that the Reserve Bank of Australia (RBA) will make further moves before the end of this year.
“While there were already some signs that the rate of price growth was slowing at the beginning of this year, we were not expecting interest rates to rise until early 2023.
“By the end of this year, we expect the cash rate to rise to between 2.5 per cent and 3 per cent, with some further increases in early 2023,” he has predicted.
“Thereafter, we expect rates to remain on hold with the potential for them to be reduced in late 2023 or early 2024.”
According to Mr Kusher, while price growth was already showing signs of slowing pre-rate hikes, the decisions to lift rates consecutively have not only slowed price growth to date — but already resulted in some falls, with national property prices having dropped -0.5 per cent already since their March 2022 peak.
“Prices have already slipped lower than their recent peaks in Sydney (-1.5 per cent), Melbourne (-1.8 per cent), Brisbane (-0.1 per cent), Darwin (-0.6 per cent), and Canberra (-0.5 per cent), while the rate of growth continues to slow elsewhere,” the director pointed out.
“The recent run-up in prices, coupled with reducing borrowing capacities as interest rates rise, is likely to see price falls broaden and then accelerate further into 2023, with the more expensive cities expected to record the largest price falls.”
PropTrack is now forecasting prices to fall by between -2 per cent and -5 per cent nationally by the end of 2022, while further falls of -7 per cent to -10 per cent are expected by the end of 2023.
From Mr Kusher’s perspective, it is Australia’s most expensive cities — Sydney and Melbourne — that are set to lead the decline.
He’s predicting prices to fall between -3 per cent and -6 per cent in each city by the end of this year, and further -9 per cent to -12 per cent falls across the 12 months of 2023.
While Brisbane will potentially see small gains in 2022 (of 2 per cent to -1 per cent), prices are expected to drop between -6 per cent and -9 per cent by the end of next year.
Hobart (-1 per cent to -4 per cent), Canberra (-3 per cent to -6 per cent) and Darwin (0 per cent to -3 per cent) will likely see relatively small falls over the remainder of this year.
It’s a trend set to continue through to a new calendar year, with Hobart and Canberra pegged for -7 per cent to -10 per cent declines through 2023, while Darwin is predicted to see falls of -4 per cent to -7 per cent.
Rounding out the capital cities, Adelaide and could buck the downward trend, with Mr Kusher revealing that the cities can expect to see growth of 2 to 5 per cent before this year is up.
It’s a different story for 2023, when Perth may still see growth, with price growth of -2 per cent to 1 per cent, while Adelaide is likely to see declines of -3 per cent to -6 per cent.
The wide-reaching forecasts for a more subdued property market will hit the regions, too, according to Mr Kusher, who has noted that “demand for regional properties is also likely to slow”.
“Given prices have seen stronger growth in these areas than within the capital cities, we expect to see price falls in these markets too,” he said.
Despite the curbing of growth that PropTrack expects to ring true over the next 18 months, Mr Kusher has noted the “exceptional pace” of growth seen in property prices nationwide since the onset of the pandemic back in February 2020.
Highlighting the 34 per cent growth seen across domestic markets since that point in time, the director of research has reminded Australians that “even with a -15 per cent fall by the end of next year, home prices will still be well above pre-pandemic levels”.