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Property experts warn that buyers who wait anxiously for Australia’s high priced houses to drop in price will be disappointed.
Don Peleg, CEO at RiskWise Property Research, said that while there are signs that the exponential increase in property prices may slow, it is unlikely that prices will become less expensive than they currently are.
“We don’t expect the Reserve Bank will increase the cash rate by 2022. Mr. Peleg stated that banks and nonbank lenders are fiercely competitive, which is keeping mortgage prices down.
“We anticipate dwelling price increases between 5 percent and 8 per cent in 2022, assuming there aren’t any significant macroprudential restraints.”
“In two years, we expect to see dwelling prices rises that are greater than they currently are.”
Australia’s housing costs are increasing at an alarming pace. They have risen by 17.6% over the first nine months of 2021, which is the fastest pace since June 1989.
Only in Sydney will house prices rise by $102,000 more in 2022, due to international travel driving a return on investor investment.
Mr. Peleg says that there will be a lot of interest in family-friendly homes in lifestyle-oriented and regional areas. After two years of living with the COVID-19 pandemic, many are looking for a tree or another type of sand change.
“In 2022, the average national price increase will be between 5 to 8%. Expect higher prices to buy houses and other family-friendly properties across Victoria, New South Wales and south-east Queensland. However, properties at the top of the market will likely see slower capital growth,” Mr. Peleg stated.
“Overall, it is likely that dwelling prices rise in the coming years.” Prospective buyers who were hoping for price drops will likely be disappointed.
Pete Wargent, an online platform BuyersBuyers stated that the forecasts of an increase in interest rates that would cripple house prices are largely exaggerated due to the momentum in Australia’s property market.
“Election years come with their own uncertainties, but the talk of significant price declines due to a fast interest rate hiking cycle is overdone,” Mr Wargent said.
“We anticipate 2022 to be a busy year in the housing market, especially for investors. Buyers waiting for the promised price declines will likely be disappointed, in our opinion.”
Bill Evans, Westpac’s Chief Economist, predicted in 2023 that the property market would enter a “correction phase”. This was in line with the Reserve Bank of Australia’s prediction of an increase in interest rates.
Don’t expect a deal. Mr Evans – like Wargent and Peleg – believes the market is still expected to post huge booms through all of next year.
Evans predicts that Evans’ prediction for 2022 is “The strong momentum will continue, however, the pace is expected slow down, levelling off over next year, and then moving into a correctional period in 2023.”
“We expect price increases in 2022 to slow down at 8%, which is higher than our previous forecasts of just 5%,” with most that increase being loaded into the first half of the year.
“We remain firm in our belief that the markets will enter the first year after correction in 2023, when official interest rates rise.” We believe that now is a good time for us to reiterate our earlier views, with prices expected to retrace at around 5%.
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