A major bank has changed its residential property price forecasts, now expecting average capital city values will rise 8 per cent this year and fall 6 per cent in 2023.
ANZ chief economists Felicity Emmett and Adelaide Timbrell had previously been tipping an increase of 6 per cent in 2022 and a drop of 3.5 per cent next year.
“Rising mortgage rates, tighter credit and a large increase in stock on the market combined with reduced affordability are all set to weigh on price growth this year,” they wrote on Wednesday.
“In 2023, we see prices falling modestly as xjmtzywhigher mortgage rates start to bite.
“In the context of the 30 per cent-plus rise in prices since October 2020, the 6 per cent decline we’re forecasting for 2023 is a very modest correction.”
The pair expect the strongest gains this year will be in Brisbane (16 per cent), Adelaide (11 per cent), Sydney, Hobart and Canberra (all 9 per cent).
They predict Melbourne will have 5 per cent growth, with Perth and Darwin both rising just 3 per cent.
AMP chief economist Shane Oliver on Tuesday said prices would likely rise 3 per cent this year and fall 5-10 per cent next year.
Dr Oliver said house prices in Sydney and Melbourne, which had worse affordability and higher debt to income levels, would probably peak by mid-year “and risk top to bottom price falls of around 15 per cent”.
“Other cities and regions may not peak till later this year and have more modest top to bottom price falls,” he said.
National Australia Bank expects a 3 per cent rise this year and a fall of about 10 per cent in 2023.
Commonwealth Bank also predicts a 10 per cent drop next year as higher interest rates weigh on demand for credit, following a 7 per cent lift in 2022.
CoreLogic data released earlier this month showed Canberra and Melbourne had joined Sydney with a more than $1m median price tag for houses.
