Home prices to plunge as early as next year for some capital cities
Aspiring home buyers won’t have to wait much longer for the property bubble to burst, with data showing the market will plunge earlier than expected.
Aspiring home buyers won’t have to wait much longer for the Australian property bubble to burst, with new figures predicting the market will plunge as early as next year.
On Thursday, SQM Research released its Christopher’s Housing Boom and Bust report which forecast that midway through 2022, prices across most capital cities will drop.
That’s a less conservative estimate than other forecasts, with 2023 slated as the year when the market would start slowing down, according to the big banks.
In the past year, the Covid-19 pandemic has turbocharged the real estate market by more than 20 per cent, the strongest growth since the late-1980s boom.
But Sydney and Melbourne, which have long been the country’s largest hubs for property, are on track to drop by up to three and four per cent if cash rates rise and regulations tighten.
Brisbane is set to defy the trend, with the Queensland capital set to grow by up to 14 per cent next year.
Louis Christopher, Managing Director of SQM Research, said: “As 2021 draws to a close, the national housing market is starting to show signs of a peak.”
Mr Christopher said he hoped stricter home lending regulations were put in place to slow the market if this didn’t occur naturally.
He thinks the Australian Prudential Regulation Authority (APRA) will intercede further into banking regulations, which could happen as soon as next month.
“If the Australian housing market does not slowdown by mid-2022, APRA will likely keep intervening in home lending until the market does slowdown,” Mr Christopher wrote.
“We cannot afford another year of 20 per cent plus gains across the national housing market.
“And so, to ensure a soft landing for the market, it is best we see additional intervention sooner rather than later to reign in property valuations.”
Sydney, Melbourne, Darwin and Hobart properties are going to experience falls of up to three, four and five per cent.
This year, in contrast, Hobart homes rose by a whopping 28 per cent in value while Sydney wasn’t far behind at 25 per cent.
Brisbane will rise between eight to 14 per cent, according to the research, the highest out of any capital city.
Perth, Adelaide and Canberra are also supposed to rise marginally.
It’s a slightly different outlook to an ANZ report from last week, which thought that the overall market was tipped to rise by six per cent next year, and then drop by four per cent in 2023.
The report’s authors pointed out that it even though the market is heading for a cool-down, prices will never be what they were pre-pandemic.
That means that you would have been better off if you bought a home in 2019 than in 2023.
“If our forecasts pan out, housing will be 27 per cent more expensive at the end of 2023 than at the end of 2019,” the report warned.