Already a subscriber?The pace of growth in house prices, already modest in the biggest markets of Sydney and Melbourne, is expected to slow substantially as interest rates remain higher for longer and as more as downside risks emerge for the market, experts say.
“I don’t think inflation will be returning quickly to target, so it’s more likely that rates need to be held at this level for an extended period of time,” Mr Kearns said. “The only thing that is potentially going to save the market from seeing a big hit on prices is the fact that stock levels have been low in many markets.”
“But I think we could see a bit of a softening in the rate of growth going forward as the uncertainty over interest rates grips buyers, along with prevalent poor affordability and a slowing job market.”There was also a risk that home owners would run out of buffers if interest rates stayed high for a long period of time, AMP chief economist Shane Oliver said.
In the first nine months of interest rate rises, national home values slumped by 7.5 per cent, however the market returned to an upswing, gaining 2.8 per cent by the end of last month. Since bottoming out in January last year, home values have increased by 11.1 per cent.Perth and Adelaide effectively escaped the rates-induced downturn that dragged the biggest capitals, as house prices jumped by 25.7 per cent and 14.8 per cent over the past two years respectively.
By contrast, Bundeena in Sydney’s south topped the worst-performing house markets in the capital cities, with prices slumping by 19.8 per cent since the start of rate rises.
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Source: FinancialReview - 🏆 2. / 90 Read more »