NAB has revised down its outlook for property prices in 2022 and 2023, after predicting the first interest rate hike to occur in November this year.
Property prices are now expected to reach a “turning point” in the second half of 2022 before falling in 2023, according to the latest residential property survey from NAB’s Group Economics, led by group chief economist Alan Oster.
“Overall, we see dwelling prices rising around 3 per cent in 2022 before a decline of around 10 per cent in 2023,” NAB said.
“We see this as a relatively orderly decline, and it is important to remember this correction comes after a very sharp run up in prices over the last year. More broadly we expect the economy to continue seeing healthy outcomes.”
NAB foresees price drops of 11.4 per cent in both Sydney and Melbourne in 2023, along with declines of 8.1 per cent in Perth, 6.4 per cent in Brisbane, 5.8 per cent in Adelaide and 4.1 per cent in Hobart.
Moreover, price growth across the capital cities this year is anticipated to be only a fraction of the growth seen in 2021.
For the full year, growth of 1.9 per cent is expected in Sydney compared to 25.3 per cent last year, while Melbourne is expected to record growth of 1.2 per cent, down from 15.1 per cent.
“We have brought forward the timing of the correction we expect in house prices to late 2022 as affordability constraints begin to bite and rising mortgage rates place downward pressure on prices,” said NAB.
“This would offset gains seen in early 2022, so that overall, prices end the year roughly flat.”
House prices in Brisbane are predicted to end this year 4.2 per cent higher, with growth of 4.5 per cent in Hobart, 3.5 per cent in Adelaide and 1.2 per cent in Perth.
“More broadly we expect the economy to continue seeing healthy outcomes. With above trend growth this year, we see unemployment drifting lower, boosting wage growth and driving more sustainable inflation,” NAB said.
“This would see the RBA begin normalising rates from November 2022 with a steady series of hikes to come through 2023 and 2024.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
