Australia’s “red hot” property market has started to cool, with prices to peak next year and sink 10% 在 2023 as higher borrowing costs and “natural fatigue” set in, the nation’s largest mortgage lender predicts.
Home prices in 悉尼, which will post among the fastest gains in 2021 with a forecast 27% jump, will moderate to a 6% advance in 2022, according to Gareth Aird, head of Australian economics for the Commonwealth Bank. 经过 2023, 尽管, the harbour city’s prices will fall 12%, the equal most of any capital city, matching Hobart’s predicted retreat.
墨尔本, which was harder hit by pandemic-related lockdowns, will post a 17% rise in property prices in 2021, among the smallest gains. Price pressures will persist a bit longer, with the CBA tipping an 8% advance in prices next year before a 10% decline in 2023.
“The Australian housing market is in the twilight of an incredible boom that has been fuelled by record-low mortgage rates,” Aird said in the note.
“The phenomenal lift in prices is not over yet given dwelling prices are still rising briskly in most capital cities,“ 他说. “But near-term indicators of momentum coupled with the recent move higher in fixed rate mortgages suggest that conditions will moderate from here.”
Signs have been gathering that the run-up in property prices is losing steam. One was the decision in October by regulator the Australian Prudential Regulation Authority to expand the buffer on borrowers’ ability to make loan repayments to at least 3 percentage points above the loan rate from 2.5 percentage points previously.
Banks have also lifted their fixed-rate mortgage costs, reflecting their own higher cost of capital as investors’ expectations about inflation have picked up globally in recent weeks.
There’s also an increased supply of properties on the market. CoreLogic last week noted auction volumes were on track for their busiest week since late March, and the fourth busiest since the consultancy’s data began in 2008.
Preliminary data from Domain shows clearance rates in Sydney on Saturday were at 71%, 从下 76% a year earlier, while those in Melbourne came in at 69%, also lower than the 74% notched a year ago.
Tim Lawless, research director at CoreLogic, said new listings were “really surging higher”, with Sydney running at 30% higher than the five-year average for this time of year. Melbourne was up 26% and Canberra 11%, with the latter in line with the national average for new listings.
The extra properties on offer meant there was more choice for would-be buyers and also less urgency to settle.
“It’s still a sellers market but there has been a definite change” as stock numbers rise, Lawless said.
The pace of price rises had peaked in March for markets such as Sydney and Melbourne, although Brisbane and Adelaide remained near the top of the cycle in terms of the rate of increases, Lawless said.
Aird, 尽管, downplayed the role of supply, saying there was not a very strong correlation between house prices and the amount of stock on the market.
反而, income and borrowing rates were the main propellants or drags for property prices.
反而, Aird forecast the Reserve Bank of Australia would begin a “gradual and shallow” cycle from next year, taking the official cash rate from its current record low of 0.1% 到 1.25% by the third quarter of 2023.
Those higher rates were at the “heart of our expectation that home prices will contract over 2023,” Aird said. “The cash rate is forecast to lift because the economy will be at full employment and annual wages growth will have pushed to the desired level of 3%.”
The RBA itself has indicated it is prepared to be patient before pushing rates up, suggesting it won’t move before 2023 at the earliest on current economic trends.
“House prices are not about to start falling [immediately],” Aird said.
Even if they did, the market and borrowers had weathered similar sized corrections – such as a 10% drop in national home prices between September 2017 to June 2019 – and the CBA believes the economy “will be well-positioned to absorb a decline” of that magnitude in 2023.
Rising income will partially offset the higher costs that are already being felt by some borrowers as banks lift fixed-rate loans rates. An expected restart of population growth as borders reopen to migrants and student should also temper some of the expected declines, particularly for flats.
House prices this year will rise 25% nationally, compared with a 14% advance for units, CBA predicted. Come 2023, 然而, apartment prices are forecast to decline 7%, or less than the expected drop in house prices, the bank said.