AUSTRALIA (Commonwealth Union)_The property market in Australia could expand by up to 9% in the coming year. Sydney will lead the recovery, with property gains of up to 12% expected in the NSW city. That is, as long as the Reserve Bank of Australia does not raise interest rates over 4% before beginning to lower them in the second half of 2023.
Christopher’s Housing Boom and Bust study for 2023, which was issued on Wednesday, came up with four alternative scenarios for what will happen next year. If interest rates do not rise above 4%, real estate across the country will rise by three to seven percent on average. And if interest rates begin to fall, Australia’s property market might be 9% greater than it is currently. However, in the worst-case scenario, if interest rates continue to climb and inflation continues to rise, property values might fall by as much as 6%. The cash rate is presently 2.85 percent.
According to the analysis, if interest rates remain stable, the housing market will rebound quickly. This would be due to “an increase in overseas arrivals, the return to the office, the existing lack of rental housing, the new stamp duty/land tax adjustments, and the predicted continued strength of the Sydney economy”.
There are already “signs” of a likely price hike, with rising demand for freestanding houses in Sydney’s eastern suburbs. Melbourne is expected to recoup some of its losses, albeit at a “slow pace.”
“No doubt it will be a very tough year for the RBA to walk their tightrope and pull off a soft landing for the Australian economy,” said Louis Christopher, Managing Director of SQM Research. “However, contrary to common belief, I believe they will be able to do just that.”
Australians have been smacked with six straight months of interest rate increases, following more than two years of the rate being at a historic low of 0.1 percent. Property values across the country have declined in the last 11 months as a drop in demand altered the market dramatically from the previous year. In the last several months, nearly 150 areas have lost their $1 million property value as the real estate collapse has hit homeowners across the country.
