Prices in Sydney and Melbourne are anticipated to decline by more than the other capital cities, with Commonwealth Bank (CBA) describing the falls as “significant”.
Namely, prices in Sydney are tipped to crash by 11 per cent in 2022, followed by a further 7 per cent in 2023. In Melbourne, prices are predicted to follow a very similar trend, declining by 10 per cent in 2022 and by 8 per cent a year later.
Brisbane and Adelaide are tipped to experience an equal growth of 6 per cent, before prices dive by 10 per cent and 11 per cent, respectively, in 2023.
Perth too is predicted to experience a 2 per cent price increase this year, before prices slump by 8 per cent next year.
Hobart and Canberra are both expected to see dips of 4 per cent this year and 9 per cent next year, while prices in Darwin are seen to edge down by 1 per cent this year before declining by 9 per cent in 2023.
But the CBA urged caution when interpreting the figures, noting that “context is key”.
“Price gains in 2021 nationally were extraordinary,” explained Gareth Aird, head of Australian Economics.
“Therefore, a contraction in dwelling prices is a natural response to rising interest rates given it was record-low interest rates that drove the phenomenal lift in prices in 2021,” he noted.
Mr Aird added that home prices cannot be divorced from the broader economy, while changes in home prices influence the economic outlook.
“Indeed, they are a forward looking indicator.
“It could be the case that movements in home prices will feed into the RBA’s policy deliberations if prices slide too quickly,” he continued.
The CBA expects the RBA to front load the tightening cycle and take the cash rate to what it deems a contractionary setting of 2.10 per cent by the end of 2022. It does not expect any further rate hikes in 2023.
Maja Garaca Djurdjevic
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
