Australia’s two biggest housing markets may have already seen their biggest declines, some analysts say.
However, property market movements in Sydney and Melbourne are still heavily dependent on interest rates, with all eyes on the Reserve Bank’s decision-making over the coming months.
National housing market declines of between 15 and 20 per cent have been forecast based on interest rate forecasts, including ANZ which predicts a fall of almost 20 per cent before a modest recovery in 2024.
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National home values fell 1.3% in July, according to the latest figures from CoreLogic, led by Sydney and Melbourne where values fell 2.2% and 1.5% respectively.
CoreLogic research director Tim Lawless said the rate of decline was falling slightly in Sydney and Melbourne, suggesting those markets had already seen their steepest falls.
However, he said it was highly dependent on how high and how quickly the central bank planned to raise rates, with the most expensive property markets typically the most sensitive to rate hikes.
He said the Sydney and Melbourne markets were likely to fall further, based on previous downturns, with Sydney likely only halfway through its down cycle.
Other capital markets, such as Brisbane, Adelaide and Perth, had so far proved more resilient.
However, Mr. Lawless told AAP that these markets appear to be flattening and will likely be in negative territory by the end of the year.
Property economist Andrew Wilson said Sydney, in particular, could be approaching the bottom of its correction based on the latest data from My Housing Market.
He said Australia’s strong economic performance relative to other countries meant the country would experience a shallower correction than expected.
Dr. Wilson pointed to low unemployment rates, which seemed to push up wages, but only modestly.
While these wage increases were not enough to counter soaring inflation, he said modest wage growth had the advantage of not fueling inflation and triggering interest rate hikes. more aggressive interest.
“So all of those factors would lead you to think that it might not even be as steep as some of those who have 20-30% predictions,” Dr. Wilson told AAP.
He also pointed to the recovery in clearance rates in Sydney and Melbourne, which could also suggest a recovery in market confidence.
Estate boss Jason Pellegrino told the ABC that markets are “tempering” after extreme growth following the COVID-19 lockdowns.
He said the market was not moving into “bearish territory” but rather returning to standard market conditions where demand and supply were better balanced.
“Buyers were driving prices up, looking for acquisitions in an environment where there was a lack of inventory. We’re starting to see that balance,” Pellegrino said.