ANZ suspects house prices ‘have peaked’

House price growth in capital cities is expected to slow to 8% this year before falling 6% in 2023, the big four predicted.

ANZ said in an update on Wednesday February 16 that growth in the property market appears to have peaked after posting the largest annual gains since the late 1980s.

“Rising mortgage rates, macroprudential tightening, increased new listings and limited affordability will see house price inflation moderate this year,” said ANZ senior economists Felicity Emmett and Adelaide. Stampell.

“Returning immigration and very low unemployment will be supportive, but eventually higher rates will outweigh positive fundamentals and prices will fall. Lower, but not significantly lower.

While noting that higher interest rates would likely be the main driver of market weakness over the next two years, ANZ said it did not expect house prices to fall sharply. .

“After a rise in house prices of more than 30% since the end of 2020, a drop of 6% is quite modest and should not translate into a sharp drop in residential construction or weigh heavily on housing spending. consumption, given very high savings rates and increased buffers,” ANZ said.

ANZ previously forecast a 6% rise for 2022 and a 3.5% fall for 2023. It is the latest major bank to revise its house price forecast.

NAB expects a 3% rise in 2022 and a 10% fall in 2023, while Westpac said prices will rise 2% this year before falling 7% next year, forecasting a decline total of 14% over two and a half years.

While the big banks also vary on their forecasts for the future of interest rates, ANZ currently expects the Reserve Bank to raise rates to 2% by the end of next year.

“Higher rates and possible macroprudential tightening will be key themes in 2022 and 2023. But higher household savings rates are giving many households strong cash reserves heading into 2022,” ANZ said. .

“Homeowner households are more likely to have larger cash reserves, which can be drawn down if needed to service mortgages at higher interest rates. We also expect wage growth to pick up in 2022, which will offset the impact of rate increases for many households.

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Property refers to something tangible or intangible over which an individual or business has legal rights or ownership, such as houses, cars, stocks, or bond certificates.

ANZ suspects house prices ‘have peaked’



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Last update: February 18, 2022

Posted: February 19, 2022