Australian house prices are poised for an annual rebound during a policy tightening campaign for the first time since at least the early 1990s, when the Reserve Bank began inflation targeting and entered the modern era.
“The Australian housing market has proved much more resilient to higher interest rates,” said Andrew Boak, chief economist for Australia at Goldman Sachs Group. “We view the risks to our already above consensus growth forecasts for 2023 and 2024 as skewed slightly to the upside.” The central bank’s hikes between May 2022 and June 2023 lifted the cash rate to 4.1 per cent, the highest level in more than 11 years, as it sought to regain control of inflation that remains well above the RBA’s 2-3 per cent target.
The resulting upward revisions to the back-series increased the pandemic-era gain in home prices to 26.6 per cent from 23.1 per cent between February 2020 and April 2022. In addition, the peak‑to‑trough decline for the eight‑capital city index was lowered to 8.1 per cent from 9.7 per cent.The revisions led three of the 13 respondents in the Bloomberg poll, including top lender Commonwealth Bank of Australia, to upgrade their forecasts for this year, while two revised their predictions for 2024.