More people expected house prices to rise than fall in a key consumer sentiment survey last month.How far house prices fall will depend on how much interest rates rise.Home sellers may be hoping for a house price rebound this year, but a sharp uplift in the public’s property price expectations is at odds with leading economists who predict the downturn has a way to go.
More people expected property prices to rise than fall in last month’s Westpac-Melbourne Institute House Price Expectations Index, which surged by 27.6 per cent. He did not expect prices to rebound until 2024, when he forecasts a 2 per cent rise off the back of rate cuts. “The rise in interest rates has reduced the capacity of a borrower…by about 25 per cent, whereas prices are down about 8 per cent. So, even if rates stop rising, there is still a significant work through of the impact of higher interest rates [to come],” he said.
“Then as the RBA signals it’s getting closer to rate cuts, which we’ll probably start to see later in the year… that should enable the property market to bottom out and start rising.”The Commonwealth Bank’s head of Australian economics, Gareth Aird, also expects the market to hit its low around the September quarter, and has forecast a 15 per cent peak-to-trough fall, and a decline of up to 19 per cent in Sydney.