ANZ Economics has revised its forecast peak-to-trough decline in Australian house prices to 18%, with a recovery not expected until 2024:
ANZ: Australian house prices to fall 18%.
The decline in prices will be driven by reduced borrowing capacity following the Reserve Bank of Australia’s aggressive interest rate hikes.
“With our expectation that the cash rate will peak in May next year, we think that most of the impact on prices will be fully reflected by the end of 2023”, ANZ said.
“In 2024, as policy stabilises and then eases late in the year, we expect to see a modest recovery begin to emerge in house prices and look for gains of around 5 per cent by end-2024”.
The next table shows the forecast declines across the four major capital cities:
Nationally, house prices are forecast to fall 7% this year and 11% in 2023.
Sydney house prices are forecast to decline 12% this year and another 8% in 2023, whereas Melbourne prices are forecast to fall 8% in 2022 and another 9% next year.
Brisbane house prices are forecast to decline only 1% this calendar year followed by a 10% fall in 2023, whereas Perth values are forecast to rise 2% in 2022 before falling 13% next year.
While not shown in the table above, Adelaide house prices are forecast to fall a whopping 21% in 2023 following a 9% increase this year.
If ANZ’s forecasts come to fruition, it would represent the biggest house price decline in Australia’s modern history, easily eclipsing the record 2017-19 peak-to-trough correction of 10.2%.
