Why first homebuyers waiting for a dip in property prices ‘will be disappointed’
Buyers anxiously waiting for Australia’s supercharged house prices to reduce will be disappointed, property experts have warned.
CEO of RiskWise Property Research Don Peleg advises that while there are signs the exponential growth of property prices will ease, it’s highly unlikely that prices will become cheaper than what they currently are.
“We don’t expect the Reserve Bank to increase the cash rate in 2022, and there is fierce competition between banks and non-bank lenders, keeping a certain level of downward pressure on mortgage rates,” Mr Peleg said.
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“We expect to see dwelling prices rise by between 5 per cent and 8 per cent in 2022, in the absence of substantial macroprudential restrictions.
“And two years from now we expect to see dwelling prices that are higher than today.”
Australia’s housing values are currently rising at the fastest annual pace since June 1989, having increased by an eye-watering 17.6 per cent over the first nine months of 2021.
In Sydney alone house prices are predicted to jump by an additional $102,000 in 2022 as international travel brings a return of investor demand.
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Mr Peleg said that much of the interest will be on family-friendly houses in regional or lifestyle-oriented areas as many look for a tree or sea change after two years of enduring the COVID-19 pandemic.
“Nationally, we expect a price increase in the range of 5 to 8 per cent in 2022. Houses and other family-suitable properties – particularly in the more affordable areas in New South Wales, Victoria, and south-east Queensland – are expected to be at the higher end of that range. However, properties at the top-end of the market are likely to deliver slower capital growth” Mr Peleg said.
“Overall, it is likely that dwelling prices in a couple of years will be higher than the current prices. Prospective buyers who are now waiting for price reductions will probably be disappointed.”
Pete Wargent from online platform BuyersBuyers said that forecasts of an interest rate rise crippling house prices are largely overinflated, such is 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 expect 2022 to be a very busy year for housing market transactions, especially for investors. Buyers waiting for the promised price declines will likely be disappointed, in our opinion.”
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Last month Westpac’s Chief Economist Bill Evans predicted that the property market enter a “correction phase” in 2023, in line with the Reserve Bank of Australia’s indications of a rise in interest rates.
But don’t expect to snag a bargain. Mr Evans – like Wargent and Peleg – believes the market is still expected to post huge booms through all of next year.
“As for 2022, the strong momentum will continue but the pace of gains is expected to slow, levelling out over the course of next year before moving into a correction phase in 2023,” Mr Evans predicts.
“We expect price growth to slow to 8 per cent in 2022, up from our previous forecast of 5 per cent), with most of that increase loaded into the first half of the year.
“We stick with our previous views that markets will move into the first year of a correction phase in 2023 as official interest rates rise, with prices forecast to retrace by 5 per cent.”
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